Top Gun and the Inverted Yield Curve

Ladies Night Out on Facebook

What a great time we had at California State University, Fullerton for our 11th Annual What Matters Most: Ladies Night Out. We set a record attendance for KFM Clients and Friends as we celebrated the 50th Anniversary of Woodstock with the performers from CSUF. For pictures, please check out Kemp Financial Management’s Facebook page. Thanks again for all who participated and we look forward to having our 12th annual event next year!

A few of our guests from this year’s Ladies Night Out. Take a look at our Facebook page for more photos.

A few of our guests from this year’s Ladies Night Out. Take a look at our Facebook page for more photos.

KFM Update

Kate Coogan has joined KFM effective September 9th. Kate will be taking over as Client Communication Specialist (Wyatt’s former position) assisting with client update meeting set up and preparation as well as office administration. Kate is a graduate of California State University, Long Beach with a Bachelor’s Degree in Human Development. Kate is married to Todd and has two beautiful daughters. We welcome Kate and look forward to having her as a part of our KFM Team. Make sure to introduce yourself the next time you contact the office.

Follow Up from Prior Newsletter 

As discussed last quarter, there is not any new news relating to The Setting Every Community Up for Retirement Enhancement or Retirement Enhancement and Savings Account Acts as of this writing. While this will not impact all of our clients, we have had some great conversations around “rethinking” how to distribute retirement assets to beneficiaries and charities. While any decisions should wait until the passing of one or the other acts, it’s still wise to be thinking about the issues now so that you can make informed decisions when the time comes. For more information, please see last quarter’s newsletter by clicking here.

Third Quarter Capital Markets Update: Top Gun and the Inverted Yield Curve 

In the 1986 movie classic Top Gun, Maverick (Tom Cruise) describes his encounter with an enemy jet Mig 28. It went something like this:

Maverick: Started up on his six, when he pulled in through the clouds, and then I moved in above him.

Charlie (Kelly McGillis): Well, if you were directly above him, how could you see him?

Maverick: Because I was “inverted”.

What is “inverted”? In this instance, upside down. While nobody believed Maverick, his sidekick Goose (Anthony Edwards) had a Polaroid picture to prove it.

inverted planes.jpg

In August, long and short-term rates as measured by the 2-year and 10-year treasury “inverted”. It doesn’t mean “upside down” in this instance, but close. What it really means is the long-term 10-year yield was lower than the short-term yield of the 2-year treasury, also known as an “inverted yield curve”.

While I would rather talk about the radical maneuver of the pilot in Top Gun, the “inverted yield curve” has kicked off the mainstream media to begin talk about “recession” due to the inversions that occurred throughout August. While this phenomenon could be seen as a predecessor to a recession, it is not 100% accurate in its prediction.

Here is what we do know:

  • The yield curve inverted

  • We will have a recession, at some point in working with one another, more than likely two or three, depending on your current age

  • Worldwide interest rates are negative, with the exception being the United States

  • We are in a trade war with China

  • The US Dollar is VERY strong

Here is what we don’t know:

  • Was the inversion of the yield curve inverted because of “supply and demand” from negative interest rates throughout the world?

  • When will the recessions be?

  • Will worldwide interest rates ever turn positive?

  • Will interest rates in the United States turn negative?

  • When will the trade war end?

  • Will the dollar weaken against other currency?

Glancing at what we do know and what we don’t know, the real question is: Should we do something different? While we cannot answer that question for people outside of the KFM circle, we can for our clients. Other than the continued use of our rebalance process, managing cash flow and expectations, there is not much to do other than stay committed to the process.

For starters, just because the word “recession” has become more prominent in the financial media, there is not any statistical evidence that suggests all recessions are “bad”, “deep” or “equal”.

There have been 23 recessions since 1900. The average recession lasts a total of 424 days, with the longest being 1,307 (Year: 1929) and shortest 181 (Year: 1980). The daily percent change in the Dow Jones Industrial Average from January 2, 1900 to May 25, 2018 for all trading days was +0.026%. The best one-day increase in the DJIA was +15.34 (Date: 03/15/1933) and the worst -22.61 (Date: 10/19/1987). Since 1926, the average return from the capital markets as measured by the S&P 500 Index during a recession was -3.58% (we do not have statistical data or returns from the early 1900’s).


During recessions, the average daily decline was -0.045%, with the worst one day performance was -12.82% (Date: 10/28/1929) and best one year increase of +14.87% (Date: 10/06/1931). During expansions, the average daily increase was +0.048% with the worst decrease of -22.61% (Date: 10/19/1987) and the best increase of +15.34 (Date: 03/15/1933).

For a quick recap: Inverted yield curves happen. They are not 100% predictive of recessions or future market performance, positive or negative. Recessions happen. Recession does not equal market declines like 1929, 2008, or 2009. Volatility is also the nature of the beast. Regardless of recession or no recession, staying calm and committed to the long-term will provide the confidence that you too can fly a really fast jet, upside down, like Maverick.

We will be discussing the current market environment in more detail in your update meetings in the upcoming fourth quarter.

We greatly look forward to meeting with you in person, by phone or “virtually” over the upcoming weeks and months. If anything in your financial situation has changed, please contact our office as soon as possible to discuss in more detail. We thank you again for your continued trust and confidence that you place in our organization to assist you in reaching your desires and dreams in the years to come. We also wish you a Happy Thanksgiving celebration with family and friends. As always, there is so much to be thankful for!

Annual ADV Part II and Privacy Policy Announcement

As a client of Kemp Financial Management, LLC, you received your copy of our ADV Part II at the time you became a client. Every year, we offer a complimentary copy of our most recent ADV Part II for your review and files. In addition, we also offer you Kemp Financial Management, LLC’s current Privacy Notice. You can download our ADV Part II for 2019 by clicking here: KFM 2019 ADV Part II. You can download our Privacy Policy for 2019 by clicking here: KFM 2019 Privacy Policy. Please contact Wyatt at 714-257-0800 or by e-mail at in the event you would like a physical copy of our most recent ADV Part II and/or Privacy Policy. The most recent versions of both documents are always available in the footer section of our website.

What Matters Most: Change is Great! (or as Dylan says, The Times They are a-Changin’)

Both SECURE and RESA Bills Make Progress

In our book, 10 Truths: How To Create Financial Independence, we talk about how the days of corporate pensions are all but over. In the past, retirement income was created using three sources: Pensions, Social Security and Retirement Savings. Today, for the most part, pensions are gone.

Education is needed at every level to better prepare individuals for their own retirement. Whether you are just entering the work force from college, or in the middle of your career, the need to start saving for retirement has never been greater.

Consequently, there are some legislative initiatives that seem to be making headway through the political system. The SECURE ACT (Setting Every Community Up for Retirement Enhancement Act) is expected to make it through the Senate during this current term. There is also a similar bill before the Senate, RESA (Retirement Enhancement Securities Act). While neither of these bills have officially passed, it is the first time we have seen new retirement legislation since 2006. It is anticipated that one, or the other, or combination thereof, will probably make it into law.

Here are just a few of the highlights:

1)      Increase Small Employer Access to Retirement Plans – It would essentially allow small employers to come together to set up and offer 401(k) plans with less fiduciary liability concern and less cost than exists today. The goal here is to try to expand small employers’ capability to offer some form of retirement savings to employees.

2)      Increase the Age for Required Minimum Distributions (RMD) – Under current rules, most of our clients are required to take RMDs at age 70½. The SECURE Act would delay this requirement to age 72, while the RESA Act seeks to extend the age to 75U Many of our clients would benefit greatly from the extension of time.

3)      Removal of Age Limitation on IRA Contributions – Under the current rules, contributions for individuals working beyond 70½ are not allowed. The SECURE Act would remove the age limitation allowing individuals to contribute to IRAs after the age of 70½.

4)      Tax Credit for Automatic Enrollment – Under the SECURE Act, a new credit of $500 to help smaller employers encourage automatic enrollment into their retirement plans will be introduced. This will help offset some of the costs for employers when starting up retirement plans.

5)      Penalty-Free Distributions for Birth of Child or Adoption – The new rule found in the SECURE Act would allow an aggregate amount of $5,000 to be distributed from a retirement account without the 10% penalty in the event of a qualified birth or adoption. The distribution would need to occur within one year of the adoption becoming final or the child being born.

6)      Removal of “Stretch” Inherited IRA Provisions – The Secure Act would make significant changes to inherited retirement plans like 401(k)s, traditional IRAs and Roth IRAs. In the past, beneficiaries of these accounts have been able to spread the RMDs over their own life expectancies. However, the new bill includes a tax generating provision that would require most beneficiaries to distribute the account over a ten year period. This change will radically accelerate the depletion of inherited retirement accounts.

We will continue to look for more information relating to SECURE and RESA. As mentioned earlier, neither bill has passed, but we want to keep you informed as to the potential changes that may be forthcoming.

KFM Update

This has been the quarter of transition and change. It’s been a tremendous amount of work but ultimately a lot of fun! With your help, we have created a direct relationship with your custodian, eliminating Loring Ward as our back office provider. While there were some nights that caused the question “why are we doing this?”, the majority of the time we’ve asked “why didn’t we do this sooner?” While we know the answers to both, we are excited to be on this side of the transition.

The transition has taken on multiple forms of efforts. Over 25 years of historical data had to be moved from one platform to another. Our trading platform has been customized for each client’s personal situation. Our quarterly performance report and billing needed to be created, tested, tested, tested and tested again. Our client portal also needed to be created. While the client portal will constantly be a work in progress, we are excited to make this a more regular feature of your interface with Kemp Financial Management. We are most hopeful the client portal will simplify your need for information relating to your personal financial affairs. Lastly, thank you, our client, for signing the necessary documents to effect this change.

The KFM Team (Rob, Otto, Wyatt, Lissa, and Patrick in front) taking a break from all the hard work to have an impromptu ice cream party.

The KFM Team (Rob, Otto, Wyatt, Lissa, and Patrick in front) taking a break from all the hard work to have an impromptu ice cream party.

We hired a summer intern, Otto Kemp. Otto is in between his freshman and sophomore year at Point Loma Nazarene University in San Diego. Otto’s current major is Exercise and Sports Science and we hope his internship changes his major back to Business. Otto currently plays baseball for the Sea Lions. Otto will be training his replacement when he returns to Point Loma in the fall. So be on the lookout for a new addition to KFM in September.

Patrick Joyce officially joined our firm in May coming from Reliance Standard as a senior sales consultant. Prior to working for Reliance, Patrick worked in operations at Taylor Made. Patrick holds a Masters in International Studies emphasizing in business and education. Patrick is an avid golfer, married to Gina and has three children ages two to seven.

If you have not logged on to our Client Portal, we encourage you to contact Otto, Patrick, or Wyatt to assist you with access.

Capital Markets

When Patrick came on board in May, we joked with him “the worst thing that can happen is a major market decline.” What a great way to start your new role as a financial advisor! While we did not have a major market decline, there were not very many positive market days throughout the month of May. We joked with Patrick that it was all his fault.

In our attempt at finding humor, we did “steal” a line that I’ve heard often, and that is: “We are one tweet away from a rally!” While we still think this is funny, in reality it’s actually a sad commentary to the times we were in and what can potentially move markets.


Information, data or “noise”, however you want to deem it, is more rapid, immediate, rampant, accessible and disseminated like never before. 32 years ago it was discussed Reuters put out 30,000 pages of financial information per minute. Think about how much information comes out now, per minute. It’s a mind bender.

But, what’s the source? Is it true or false? This is not meant to be an attack on “fake news”, it’s just simply the reality that information is flowing ever so quickly. It is a sign of the times that likely is only going to get worse.

The source of which it comes from seems to have no apparent bearing on its truth or legitimacy. This is not a political statement, nor is it an admonishment. It is simply just the reality of the times we live in. The fact is, it’s only going to become more pervasive.

Thankfully, being a long-term investor allows you to NOT trade on the news.  For KFM, we reference Truth #9 all the time: “Listening to the media causes unnecessary stress.” It’s true.

Imagine if we called you on May 3rd and said, “The news is not good. It’s time for us to get out. We don’t think things will improve until a trade deal is completed with China.” Had we done that, imagine the calls that we would have received in June asking, “when are we getting back in?” The news is not any better than it was on May 3rd, but the capital markets sure are.

We know we preach to the choir. We know you get it. But we also know, it’s not easy to stay away from the “noise”. So, be careful what you listen to, watch or follow. Our suggestion:  listen, watch and follow things that you enjoy add value to your life. Our continued encouragement is to pursue with passion, what matters most in your life.

We look forward to meeting with you in the upcoming quarter. With the new Client Portal, we have another avenue to use for “virtual meetings”. While in person meetings are always the most enjoyable, with the help of technology, we can also accomplish the next best option of being together in our KFM Family Room through “virtual meetings”. Lastly, a thank you for your continued recommendations to our firm. We are greatly encouraged with the number of people we met for the first-time last quarter. Thanks again for your continued trust and confidence in KFM.

Save the Date for Kemp Financial’s Annual Ladies Night Out!

We are very excited to hold our 11th Annual What Matters Most: Ladies Night Out once again at Cal State Fullerton’s Concert under the Stars. This year’s event will take place on the evening of Saturday, September 21st so please mark your calendars. More details to follow soon.

Planning Before, During and After Retirement

While there are certainly more than 5 myths, we wanted to share some insightful information relating to retirement and what we consider to be the top 5 myths surrounding retirement. Even if you are retired, we believe the information relating to debunking the myths is worth your read.


I will Die before I reach 90. According to LIMRA (research), 25 percent of 65-year-old men with average health will live to age 93, and a quarter of women in that category will live to 96. The report noted that underestimating longevity risk could pose a significant threat to retirees who plan to spend down their wealth over time, leaving less to their heirs and charitable causes. This is one of many reasons as to why KFM decided to expect their clients to live forever. While we know this is impossible, we do know that our clients are living well beyond their life expectancies. We also know nobody can predict their demise. If clients plan to live forever and spend their wealth accordingly, this should prolong the longevity of their wealth throughout their lifetime(s) while providing the opportunity to leave a legacy.

I will keep working and never retire. Retirement is not always a choice. LIMRA says that over half of retirees retired earlier than they planned. About 20 percent retire because of health problems, which are not always predictable. Additionally, 70 percent of workers expect to work in retirement or transition slowly, but just 16% of retirees reported they work. In 32 years of practice, we are yet to meet that person in the 16% that report they still work. All of our clients were diligent in planning for retirement and in fact, looked forward to retirement. Once in retirement, we continue to hear “I don’t know how I worked, because I’m busier now than I was when I was working.” Even though “60 is the new 40”, our clients would suggest retiring whenever you can.

A conservative portfolio is appropriate for me in retirement. For retirees facing 30-plus years of retirement, a no-risk portfolio of bonds and CDs is very risky, making it difficult to sustain income and fend off inflation. We cannot locate the origin, but years ago there was a generalized rule that when you retire, you subtract your age from 100 and that’s how much you should have invested in stocks. If you retire at 65, 35% should be in stocks and the remainder in bonds. While there is so much wrong with this rule, it does show the oversimplification of how to invest in retirement. If you were a retiree in 1981 retiring at age 65 when interest rates peaked, that strategy may have paid off for you. However, if you are retiring now with interest rates are historic lows, we know the formula is a recipe for disaster.

My taxes will be low in retirement. If retirees need as much income as they did during their working years to maintain their lifestyle, it is not credible to think that the tax burden will be less, particularly if the retiree needs to withdraw from retirement plan savings that are fully taxable at ordinary income rates. Top tax rates are now on the lower point in many decades. However, even with this most recent tax legislation with lower tax brackets, some of our clients have actually seen their tax liabilities rise. We know tax legislation will never be constant. Therefore, banking on what tax rates will be in the future is a “zero sum” game. When you are forecasting your retirement income needs, make sure you do make adjustments for non-recurring expenses which will disappear at retirement. Reducing your cash flow needs certainly can reduce your future tax liability.

I will remain healthy enough in retirement to make decisions myself. While good physical and mental health in retirement is the goal, retirees should plan for rising health-care costs and secure help from family members or an advisor to manage financial affairs in retirement. According to the Atlantic, 1 out of every 3 Americans at least age 85 has Alzheimer’s. While this is a daunting statistic, it makes sense to be prepared to have a family member or close personal friend be in a position to assist you in making financial decisions if ever needed. In most cases, this is usually the spouse. But with the growing population of elderly singles, it’s imperative to discuss your future health and memory with your family and financial advisor.

Your team of advisors at Kemp Financial Management have taken the time to get to know you, your health, your personal financial situation, your values, your family and your current desires and dreams. With each update meeting, it is imperative to share information back and forth as it relates to the plan established for your desires. Your team of advisors at KFM considers all of the above mentioned to guide you through all of life’s stages. Ultimately, it is our desire to make sure the variations and changes of life do not interfere with your current desires and dreams. Should you have any questions about any of the “myths” and the impacts on you, please feel free to set up your update meeting now by clicking here:

You can also find more detailed information in our book Ten Truths: How to Create Financial Independence.

We look forward to seeing and talking to you soon!

Kemp Financial Management Update:

For the past 23 years, KFM has been “outsourcing” a significant portion of its business operations to an outside provider in San Jose, California. As our firm continues to grow (thank you for the many recommendations!), we have reevaluated our relationship with our provider and have come to conclude, it no longer makes economic sense to outsource our back office services.

Later this year, we will be recommending that your clients terminate our shared relationship with our back office provider and move the operations directly here into our offices in Fullerton, California. We hope to have this in effect as early as July 1, 2019 but certainly no later than September 30, 2019. We are more than excited about making this change.

Organizationally, Wyatt is currently overseeing this new directive. The firm has hired an additional staff person, Patrick Joyce, who will be joining the firm on May 6, 2019. We will also have some additional support over summer, which will put us in position to transition in July or September at the very latest.

We will not be able to effect this change without signatures from you. Consequently, you will be receiving documents to confirm and finalize this change. We are still working out the details of the timing of the paperwork, but we will be in contact with you in the upcoming weeks. If you have any questions, please feel free to reach out to Wyatt, Lissa or Rob.

Change of KFM Dress code: Goldman Sachs, the last holdout for wearing suits and ties to work, has recently unveiled their new dress code to “flexible”. While there was no clear definition as to what “flexible” means, their policy cited “the changing nature of workplaces generally favor a more casual environment”. At KFM, we have decided to “cut ties with the tie”. While we are not going as far as “flexible”, we are going to accept the more California tradition of “relaxed business attire” going forward.

KFM Client Survey: For those that participated (almost 50%), thank you for your valuable input to our Client Survey during the first quarter of 2019. We have just received the finalized report and will be reviewing the data to look for opportunities to improve our ongoing relationships with our clients.

Capital Markets Update: Last quarter we talked about how much positive economic news there was throughout 2018 and how it did not make sense to have a correction in the fourth quarter of 2018. While there is no way we would say “we were right”, there is no question the capital markets have improved throughout the first quarter of 2019 due to the continued economic prosperity.

Since the beginning of the year, the majority of the benchmark indices are at or near the relative highs established at the close of the third quarter 2018. While it’s too early in the story to write the end of the script, it does simply demonstrate how predicting the financial markets is predictably impossible. Nobody has the proverbial crystal ball and don’t let anybody tell you they do.

There may be only two data points that are relatively different than the end of last year. First, the Federal Reserve seems to be holding tight on future interest rate hikes.  Again, nobody knows what the Federal Reserve will do going forward, but that may be the spark that got the market moving positively earlier this year. While the Federal Reserve appears to have changed their stance and policy on interest rates, just like the stock market, predicting their next move is just as risky predicting tomorrows capital markets return.

Second, it appears the United States and China are close to finalizing a trade deal, or at least that is what the capital markets are trying to predict. Once again, predicting if or when a trade deal will be reached is risky business. Combined, both the Federal Reserve and strong trade dialogue has translated to improved capital markets both in the United States and abroad.

Even with the positive advance, the news media continues to debate. Has the longest bull market in history ended in 2018? Has a bear market started due to the correction in 2018? What will happen with Brexit? Is a recession looming due to the “yield curve”? Will Tom Brady retire? Nobody knows and it will be years away that historians will be able to explain what occurred in the last 6 months.

What we do believe is diversifying your portfolio to address longevity of life, the proper balance between stocks and bonds, and retiring successfully, while keeping taxes in check and being prepared for the future is prudent and time tested. If anything has changed in your health or financial situation, please inform your KFM team.

If you would like additional education during your next update meeting, we have updated our “Ten Truths” presentation to reflect the historical data through December 31, 2018. If you would enjoy a recap, please feel free to add that to your agenda when you schedule your next meeting.

Click here:

We can’t wait to see you and talk to you in the upcoming weeks and months. We look forward to catching up. Wishing you continued great health, happiness and success!

2018 Year In Review

More often than not, we look back at the year that has just ended and we tend to focus on what happened “financially” in the past 12 months. Is my net worth more or less than last year? If you are a business owner, did my company grow or decline? If you are an employee, chances are your performance reviews are also based upon how well your team or business unit performed throughout the year. While all of this is relevant, is this what matters most?

So many great things happened in 2018. Wyatt, Lissa and I celebrated the following client events last year along with many more.

  • Three 50 Year Anniversaries

  • Countless travels throughout the world

  • Two cancer survivors now cancer free

  • One client engagement

  • 13 Grandchildren were born

  • Seven retirements

  • Eight Milestone Birthdays (40,50,60,70,80)

  • Four clients relocated

  • One business was sold

  • Three large pieces of real estate sold

  • Four Employment changes

  • 14 new clients added to the KFM Family

  • 62 clients are now one year closer to retirement

From an economic perspective, there was tremendous positive news throughout the year.

  • Tax cuts took full effect

  • Earnings were better than expected

  • Interest rates, while volatile, remained low

  • Unemployment hit a 50 year low

  • Manufacturing levels remain high

  • Consumer confidence continues to be solid

  • Consumer spending remains strong

  • Records were set in retail sales in the fourth quarter

  • Inflation is relatively benign for the year

  • Gross Domestic Product grew faster than expected

Does my year end statement reflect all of the economic positivity? From our perspective, yes and no. But MOST IMPORTANTLY, your game plan that you put together with Kemp Financial Management is still intact. So as we celebrate 2019 and all of the great things that will occur with our clients, please know that 2018 did not derail your personal game plan in any way.

If we were in a perfect world, all asset classes would go up each and every year and there would be no reason to question your game plan. The problem is we are not in a perfect world. Having been a trusted financial advisor for 31 years, we know firsthand all asset classes go up and down at different periods of time, in which we have no control. What we do know is that over extended periods of time, the capital markets, along with a prudent long-term Legacy Action Plan, will guide our clients to meeting their desires over time.

While working together at KFM, we make a point of acknowledging that we will go through periods of good times and challenging times. This is both at a financial and personal level. What we want you, our client, to stay focused on is pursuing what is most important in your life. Allow us to take care of the details while you pursue what matters most. To schedule your next update meeting, contact Wyatt at 714-257-0800 or click here: Schedule My Update Meeting.


We look forward to a lot of positive changes in 2019. Technology continues to be a significant driver in our industry every year. Wyatt, Lissa and I are excited about enhancing our communication efforts through our website and through a mobile application that we plan to launch in the third quarter of 2019. While we discourage reviewing your accounts on a daily basis, we will have the ability to have direct contact with one another through your mobile device. You will be able to receive updates and greater access to KFM as well. We will share more information with you during your update meeting in the first and second quarter. If you have not set up your update meeting yet for the New Year, please feel free to do so now by contacting Wyatt at 714-257-0800 or clicking here: Schedule My Update Meeting.

Required Minimum Distributions for 2019 will be lower than last year. Those of you that exceed the required minimum distribution for income purposes will not be affected by this reduction. But for those of you that do not “spend” your minimum distribution, this will be helpful in reducing your taxable income for 2019. Your minimum distributions have been recalculated based upon year end values along with your new divisor. You can find your 2019 required minimum distribution on your statement from your custodian. For additional assistance or questions, please contact Lissa.

Year End Trading 2018. As normal, we began reviewing taxable accounts in October 2018. Based upon the fluctuation of the capital markets in the fourth quarter, where appropriate and able, trades were made to assist in the offset capital gain distributions for taxable accounts in 2018. Not all taxable accounts were able to take advantage of the fluctuation. For those that did, most of the trades were reversed at the end of the year. For the remainder, they will be reviewed in 2019 and reversed as needed. All of the changes that were made were consistent with your long-term plan and the trades maintained your current allocation as indicated in your personal Investment Policy Statement.

Trading is now on Autopilot. In the 31 years of practice, I have never witnessed a shortened trading session like Christmas Eve, 2018. Since it now happened once, it would not be prudent for me to say it will never happen again.

Generally speaking, shortened sessions prior or after a major holiday have been uneventful. If the market was not even open, it wouldn’t matter. But the policy of the market is never to be closed more than 24 hours for major Holidays.

Just using Christmas Eve as our example, it would be impossible to discount the impact of “autopilot” on modern day trading. According to data from Tabb Group, computer models and trading algorithms account for 28.7% of the trading. This has more than doubled since 2013. According to the Wall Street Journal, when computers start buying, everyone buys; when they sell, everyone sells (December 26, 2018).

Volatility is something that is only going to increase. This means, calmer behavior must be necessary. We have always stated: Performance equals market returns plus investor behavior. Investor behavior, without question, is going to play an increased role going forward. Since computerized trading has doubled since 2013, one should expect for it to double again over the course of the next 5 years, which will further add to the market volatility going forward.

At the end of the day, you have built a long-term game plan with the assistance of Kemp Financial Management. We have been through the good, the bad, the easy and the difficult. Its times like this that you may question the wisdom of your long-term plan. You may even be saying “It’s different this time”. It’s not. Stay focused on what matters most. That will guide you through to the finish.

Please feel free to schedule your next update meeting now by contacting Wyatt at 714-257-0800 or clicking here: Schedule My Update Meeting.

We can’t wait to see you in the New Year! We look forward to hearing about all that you have to celebrate in the New Year! Wishing you continued great health, happiness and success in the New Year and beyond.


For more extended Capital Market outlook, click here

KFM Newsletter: A Great Time To Be Thankful

Kemp Financial’s Annual Ladies Night Out

We recently held our annual “What Matters Most: Ladies Night Out” event at Cal State Fullerton’s Concert Under the Stars. We had a wonderful group of women attend and everyone had a great time. This year’s theme was very fitting for Kemp Financial: Lifelong Relationships. Click here to take a look at the photos from this year.

Taxes 2018


Many of our clients have questioned whether or not there is any significant advantage to the new tax legislation effective the beginning of 2018. While there is not a standardized answer for the question, it really depends on your personal situation. With the reduced tax brackets came substantial changes with Itemized Deductions. We have always mentioned in most cases it appears to be a “wash”, but that may not be the case for all of our clients.

One area that we have seen increased interest in 2018 has been the tilt towards toward Charitable Giving. Due to the limitations listed below, many of our clients are electing to increase their itemized deductions over the standard deduction threshold through Charitable Giving.

In summary, the Standard Deduction for 2018 is $12,000 for individuals, $18,000 for heads of household and $24,000 for married couples filing jointly and surviving spouses. For 2018, the additional standard deduction amount for the aged (65 or older) or the blind is $1,300. (Source:

Here is a summary of the new limitations on itemized deductions:

Medical Expenses: The IRS allows you to deduct qualified medical expenses that exceed 7.5% of your adjusted gross income for 2018. Beginning January 1, 2019, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.

Property Tax and State Income Tax: The combination of personal property tax and State income tax is capped at $10,000.

Mortgage Interest: If you bought a new home after December 31, 2017, or plan to between now and 2026, you can deduct the interest on up to $750,000 in mortgage debt used to purchase or improve it as an itemized deduction. The new legislation wiped out the deduction for home equity debt, including on existing loans, beginning in 2018. The $1 million limit still applies for mortgages taken out prior to 2018. Be careful with this one if you plan to purchase a new home in the near future.

Miscellaneous Deductions: Under the old regulations, taxpayers were able to deduct qualified miscellaneous deductions in excess of 2% of their adjusted gross income. Miscellaneous deductions have been entirely eliminated for the tax years 2018 through 2025.

Charitable Deductions: If you are able to itemize your deductions, gifts of cash are now deductible up to 60% of adjusted gross income (up from 50%). Gifts of stock or highly appreciated assets remain deductible up to 30% of adjusted gross income (no change).

We have seen increased giving in two ways:

  1. Donating stock, mutual funds or other highly appreciated assets

  2. Donating cash distributions from an Individual Retirement Account (IRA) that is subject to minimum distribution requirements

One can usually deduct the full fair market value of appreciated long-term assets you've held for more than one year, such as stocks, bonds or mutual funds. In addition, if you donate stocks or other investments, you pay no capital gains tax.

Donating investments—especially highly appreciated securities—instead of cash can be a very effective and tax-efficient way to support a charity. Generally, if your assets have appreciated in value, it’s best not to sell securities to generate the cash you need for a donation. Contributing the securities directly to the charity increases the amount of your gift as well as your deduction.

For people older than 70½, up to $100,000 can be transferred per year from their traditional IRAs to charity, which can count as their required minimum distribution, but is not taxable if they follow the rules for a qualified charitable distribution (QCD). The gift stays out of your adjusted gross income only if you make a direct transfer from your IRA to the charity. It doesn’t count as a tax-free transfer if you withdraw the money first and then make a donation to the charity. Ask your tax advisor and IRA administrator what steps you need to take, because the procedures can vary from firm to firm.

During the fourth quarter, we will do our normal review and assessment of dividends and capital gains to determine if anything can be done to offset the gains prior to year-end. With the growth of the market over the past several years, candidly there may not be any options available for offset. We will also make sure all our clients have satisfied their minimum distribution requirements by year end. We encourage all of our clients to seek guidance from their tax consultants and CPAs as it relates to the information contained in this newsletter. 

ADV Part II Update Complete

Congratulations to Lissa Clarke for passing the Series 65 and Notary Public exams! Our ADV Part II has been updated accordingly and can be downloaded from our website (or by clicking here). If you would like to receive a copy by mail, please contact Wyatt at 714-257-0800 or by email at (For clients utilizing our Virtual Vault, the updated ADV Part II has already been added to your Important Documents folder for your review.)

Kemp Financial Virtual Vault


Over the summer, Wyatt has been busy organizing our “Virtual Vault” through the Kemp Financial Management website and ShareFile. The “vault” will include all of your paperwork, financial planning documents that we have on file, important documents (i.e. ADV Part II, Privacy Policy) as well as your Update Meeting Documents. All clients will have the ability to access their “Vault” from any of their personal devices and computers. Our “Vault” will be replacing the need to bring a flash drive to our meetings at the office. The flash drive technology is still available if desired.

The “Vault” can also be used to share documents in a secure environment as well. If you would like us to review information and/or if you request information that is “account specific”, we can share that information back and forth in a more secure environment.

If you have not signed up for the “Virtual Vault”, please contact Wyatt by phone or email for instructions.

If you would like to watch a short demo video on how to use the Virtual Vault through ShareFile, you can watch it here.

Kemp Financial Virtual Meeting

Time is free, but it’s priceless. You can’t own it, but you can use it. You can’t keep it, but you can spend it. Once you’ve lost it you can never get it back.” Harvey Mackay

Having just flew over the Los Angeles basin, it never ceases to amaze me how populated Southern California has become. The continued building of multiunit projects expanding horizontally versus vertically will only expand the ever increasing congestion in the Southland.

While we have become accustom to holding phone update meetings over the past several years due to clients moving out of State, we are hearing more and more from our local clients that travel to and from our office is beginning to take longer and longer.

While we can’t provide a good cup of coffee, we can provide a virtual experience as if you were sitting in our family room here at the office. Earlier this year we upgraded our technology to bring our family room to yours. Whether it’s on your phone, tablet or computer, we can have a more colorful conversation using technology to guide you through your Legacy Action Plan.

We can even answer questions and review statements with the help of this technology. Feel free to contact Wyatt so that he can assist you in getting set up for Virtual Meetings.

If you would like to learn a bit more about Kemp Financial’s Virtual Meeting Platform on your own, we have a few resources for you:

Video on how to use the Virtual Meeting Platform

GoToMeeting Guide for Windows

GoToMeeting Guide for Mac

Capital Markets Update

Discussions of trade still rule the day and the capital markets. That said, this quarter has been particularly strong in the capital markets over last quarter regardless of the trade talks. Most of the indices have advanced quite nicely regardless of trade negotiations, or lack thereof, that continues to produce headline news.

The advance has been for the right reasons: great earnings, expanding GDP, low interest rates, benign inflation, low unemployment, good consumer confidence and spending. The economic data that typically drives markets higher continues to remain strong.

In January of this year, the capital markets continued its surge from November, 2016 right through 2017 into the first month of the year. Many critics argued the markets were moving too fast and must be due for a correction. While technically we did not see a correction in February and March, we did see a fairly quick retreat after new highs were reached that was normalized by the end of the quarter. This quarter however, saw the capital markets return to the highs obtained in January.

The increase in market values has brought along the same question that was asked in January of this year, “when is this bull market going to end?”  It is true, we have now entered new territory with the current “bull” market being the longest “bull” market in recorded history. Having begun officially in March of 2009, as long as the markets continue to move higher, we will continue to add length to the new record territory.

While we will not attempt to answer the proverbial “crystal ball” question of when will it end, we do desire to put some perspective around this question. While we continue to be in a “bull market”, one must continue to remember the last 18 years in the capital markets have been highly unusual.

In the late 90’s, we had to remind our clients that stocks do not always go up. We reminded clients about the horrific time period of 1973 and 1974 where large and small company stocks declined 40% to 50% of value. Little did we know 2000 to 2002 the “internet bubble” would burst and stocks would experience a significant decline over that period of time. From then on, we no longer needed a reminder that stocks do not always go up. Six year later, it was proved once again when we experienced a financial crisis like no other. This crisis, deemed as “The Great Recession” drove stocks down to extreme lows easily surpassing the fears created by the earlier technology declines.  

So let’s be clear. We understand we are currently in the longest bull market in history, but let us not forget that we had two significant setbacks in the last 18 years. As mentioned earlier the last significant setback prior to 2000 to 2002 was 27 years prior. We are not suggesting this current bull market will last forever, nor are we suggesting the market is due for a significant setback. But we do not believe the only reason the market should or could go down, is connected to being in the longest bull market in history.

Regardless of the popular opinions in the media of what may occur going forward, our recommendations to our clients have always been about our client’s short and long-term desires. While we do not know what the capital markets will do today or tomorrow, we base our recommendations on your desires.

Throughout the remainder of the year, we invite you to revisit and discuss your short and long-term desires prior to your update meeting. While this is normal protocol for all of our meetings, we specifically would like you to be prepared in advance so that we can make sure we have a complete understanding of where you would like to be going forward.

As always, if you have any questions relating to the material discussed in this newsletter, please feel free to give us a call. We look forward to visiting with you in our family room, either in person or through our Virtual Meeting Platform or by phone. Wising you the very best of health, happiness and success in all you do!

KFM Newsletter: Time is Precious

TRUTH #7: It is important to pursue what matters most in life because time is precious. 10 Truths: How to Create Financial Independence.

What’s the best advice you’ve ever received?

Rob Kemp: I like to ask highly-successful people if they were to do one thing differently, what would it be? The most common answer that I receive has been “I wish I spent more time with my children.” This is something that I heard early on in my career which has always been in the forefront of my mind in raising our children.

Experiences seem to be a recurring theme throughout our clients’ lives. Whether it be travel, attending a play or concert, time with family or dinner out with friends, we get to live vicariously through our clients. One of the benefits we receive from being a trusted advisor for our clients is hearing about all of their life experiences. There is no possible way to recreate the experiences of our clients because frankly, the list is quite endless. However, the themes of “time is precious” and “make the most of your time” have been heard loud and clear and we at Kemp Financial Management thank you for that wisdom.

Group Photo North Dome.jpg

To that regard, recently the Kemp Family visited Yosemite National Park in honor of Rob and Diane’s youngest son’s recent high school graduation. A tradition was started with the first high school graduation where the graduate had the honor of selecting the summer vacation. As the children have aged, married and started careers, it has become increasingly difficult to find time where the entire family can gather. So jumping on a plane and traveling a long distance was out of the question. A five hour drive to Yosemite made perfect sense and everyone was able to clear time from their busy schedules to participate.

Tuolumne Meadows

Tuolumne Meadows

The first camp site was a backpacker campground in Tuolumne Meadows, shared among a variety of packers. We set up camp and those around us inquired as to who we were and what we were doing. We all heard numerous times “my family would never do something like that” which made the start of our adventure even more fun. We did enjoy the stories shared from numerous individuals that were on their own personal journeys on the Pacific Crest Trail. Most of them were between days 90 and 100 of their 2,650 mile journey. Hearing their stories made us appreciate the 30 plus miles that we would trek in the days that followed.

Day two was a moderate hike to Indian Rock from Porcupine Creek. Indian Rock is the only arched rock in Yosemite National park. After lunch and pictures, we continued the journey to our destination, North Dome. We found a campsite located off the beaten path near water that had an incredible view of Half Dome. After camp was set up, we finished the day’s hike to the end of the North Dome trail to be treated to a view of the valley floor and picturesque Half Dome.

Day three was a day hike to upper Yosemite Falls. Fortunately, we decided to leave our campsite at North Dome and simply hike to the falls. Once again, we were treated with an incredible view of the valley along with the iconic waterfall.

Yosemite Falls 2.jpg

We packed out on day 4 and then drove to Taft Point with a final 2 mile “out and back” hike. Taft point was on the opposite side of the valley where we hiked, so we were able to see the trails that we completed from the Half Dome side of the valley. It was incredible to see the miles traveled from a different vantage point, which provided a sense of appreciation of what we all accomplished. In total, Fitbit registered 36 miles in 3 days.

Here’s a short list of our takeaway Experiences:

What goes down, must come up. One of our hikes included a 1.5 mile decent at the beginning and the end. Since this was an “in and out” one day hike, yes, that meant 1.5 miles back up at the beginning and the end.

Patience and endurance. It was hot, dusty and full of mosquitos with limited water sources. In order to see the splendor of Upper Yosemite Falls with picturesque views of the valley from Yosemite point, there was no other way to experience it without patience and endurance.

Directional trail signs are a good thing when you don’t have a map. We would not have known where we were headed without them. While they did not provide all of the details of what the trails entailed, they did provide the direction to each destination. They were clearly marked and easy to follow.


Safety. In Yosemite, your food must be stored in a “bear can”. Trail heads are also lined with bear canisters to store items you would traditionally leave in your car. Since bears are attracted to anything with scent, our cars were emptied out into the bear canisters and our food for our travels all stored in bear cans adding additional weight to each of our packs.

No mobile phone connectivity, hence no map. What a great way to truly unwind. The phones had zero service, therefore they were stored away and only used for pictures. A complete disconnect from social media and the news with an appreciation for nature and what has been created over millions of years.

Stay focused on the goal. There were numerous points where sitting on the beach seemed like a better option than hiking in the heat and dusty trails. But once we reached our destinations, the labor of the hike was worth every ounce of energy.

Time is precious. Everyone was so grateful to have the time to be together, let alone the health to enjoy such an adventure.

Group Photo 2.jpg

All of this has ties to the Capital Markets and Truth #8: Establishing goals and staying true to them are key components to success. 10 Truths: How to Create Financial Independence.

Unfortunately, there is not much new to add to the capital markets update that is different from the last quarterly newsletter. While the fundamentals continue to remain strong, the capital markets are 100% reacting to the ongoing trade “chatter”.

Tuesday, June 26th is a great case in point. The markets opened negatively based on strong trade discussions only to turn significantly higher after it was announced a “softer tone” was being discussed on trade negotiations. Later in the day, the “softer tone” was second guessed by financial media and the market closed down for the day. This has been the repeated theme since trade discussion began in late February 2018.

What we do know is that active managers (Chapter 5: 10 Truths: How to Create Financial Independence) are trying to identify areas of the market that will perform better based upon what they think will happen throughout the trade discussions. The active approach to investing is what is causing the day-to-day gyrations in the capital markets.

Because we take a strategic approach to investing, thankfully we do not have to worry about what parts of the market, or for that matter, what parts of the world will do better than others. Because we are globally diversified and greatly diversified with our holdings in the US, we are already where we need to be if trade talks escalate or if they are solved through successful negotiations. While two camps have been formed about whether trade talks are good or bad, somewhere in the middle will be reality and eventually it will be resolved. When? Nobody knows, not even the active managers that are causing the day-to-day gyrations in the market. Rest assured, it will all come to pass.

The one bright spot in the capital markets continues to be US Small Company stocks. We see two positives from the continued positives behind the movement of US Small Company stocks. It provides evidence the fundamentals of what drives markets higher is still in play. And also, US Small Company stocks are least impacted by the ongoing trade discussions. Again, because we are strategic in our portfolio allocations, we are participating in the ongoing growth of US Small Company stocks. Diversification does matter and it is working even during periods of time like today.

In summary, the capital markets are basically where they were they were at the close of the first quarter of 2018. However, please remember the following:

  • Just like the backpacking trip, what goes down must come up.
  • Nobody said we would get to the finish line without patience and endurance.
  • You have your directions through your personalized Legacy Action Plan.
  • You have safety through global diversification.
  • And we encourage you to disconnect from the news of the day to make sure you enjoy all of life’s experiences that are most important to you.

We have enjoyed seeing many of you in the past few months and look forward to seeing more of you in the days, weeks and months ahead. As always, if you have any pressing needs or would like to schedule your next update meeting, please contact us at your earliest convenience.

Happy Fourth of July!

Our offices will be closed Tuesday, July 3rd at 1:00 p.m. and remain closed through Thursday July 5th. We will resume normal office hours on Friday July 6th.  If you require assistance during that time, please be prepared to discuss any needs prior to 1:00pm on Tuesday July 3rd.

We hope you enjoy the holiday with family and friends!

Evolution of the Yosemite Valley: Just for fun, here are some mind bending thoughts on the formation of Yosemite Valley (Source:

The area that was to become the Sierra Nevada once lay beneath a sea at the west margin of North America. The rock that was formed on this sea floor from deposited silt, mud and marine organisms was subsequently lifted above sea level and flexed into a mountain range surmounted by a chain of volcanoes much like today's Cascade Range. Granite that formed from molten rock at the roots of these volcanoes eventually would remain as the core of the Sierra Nevada after the overlying sedimentary and volcanic rock gradually weathered and eroded away.

50 million years ago. The landscape consisted of rolling hills, broad valleys, and meandering streams. The Merced River meandered through a wide trough whose slopes supported hardwood forests.

10 million years ago. A more dissected landscape ensued as the whole range was uplifted and tilted westward. This westward tilt accelerated the Merced River's flow and the river cut deeper into its valley. The climate grew cooler and drier. Forests of coniferous trees, including sequoias, dominated.

3 million years ago. A canyon landscape developed with continued uplift. The raging Merced cut its canyon as much as 3,000 feet deep. Its tributary streams, with smaller drainage basins and volumes of water, cut more slowly. The Ice Ages approach brought a colder climate and thinning forests.

1 million to 250,000 years ago. At least one and perhaps more glacial advances filled Yosemite Valley to its brim. Half Dome projected 900 feet above the ice, but many peaks to the north were engulfed. The Valley was gouged and quarried into a U-shaped trough with steep walls. Many Merced River tributaries were now cascades high above the Valley.

30,000 years ago. During the Tioga glaciation, Yosemite Glacier, a smaller ice sheet, advanced into the Valley and terminated near Bridalveil Fall. As thin as it was, it had little erosive power to enlarge the Valley further.

10,000 years ago. The last Valley glacier hat melted and its terminal moraine has dammed the Valley to create a shallow lake, Lake Yosemite. This was only the last of many Lake Yosemites that probably followed each glaciation. The deep excavation created by earlier glaciers, as much as 2,000 feet into bedrock beneath the present floor of Yosemite Valley, was already filled with glacial till and sediments long before the Tioga glaciation. This last advance of ice had insufficient erosive power to re-excavate the Valley to any appreciable depth. Lake Yosemite eventually filled in with silt, leaving today's level Valley floor. The photograph shows Mirror Lake. Today it is filling in through the same natural processes. Glaciers did not directly create today's free-leaping waterfalls, although they helped set the stage. The falls plunge into alcoves in the Valley walls, produced by frost-splitting of rock fragments off the lower parts of the cliffs over which the waterfalls formerly cascaded. Where the cliffs are dry most of the time, frost action is not so effective.

North Dome Complete.jpg

KFM Newsletter: What's New in Kempville?


Thank you for your continued comments on our book 10 Truths: How to Create Financial Independence.  Your feedback has been greatly appreciated as we have enjoyed discussing the contents of the book and how it relates to your current situation over the past several months.

The book was specifically written for you, your family, your friends and your colleagues. The book was not written to be sold to the general public. However, the book was posted on Facebook by one of our raving fans and numerous copies were sold through Amazon. While this was not our intent (we did appreciate the support), we actually received great feedback from the people that purchased the book.

For those of you that come into the office regularly, you have noticed copies in the front lobby and in our “Kempville” family room. Many of you have requested additional copies while you have visited. But, for those of you at a distance, we have also been asked by many, “How can I get a copy for . . .?” While the book is available through Amazon (as mentioned earlier), please know we would be delighted to send a copy on your behalf to anyone you feel would gain from having their very own copy.

We have created an option for our clients only on our website. Click here to request a copy.

You can simply request an additional copy to be mailed directly to you, or simply fill in the name and address of those who you would like to receive a book. A letter will accompany the book that will reference your request to send them a book. You may review the letter that will accompany the book with your request.


Wyatt has been feverishly working on our new and improved website since the beginning of the year. We reintroduced our website over two years ago and just when you thought we were done, Wyatt has made significant improvements. Here’s a brief summary of the improvements:

  • Brand new look and feel
  • Easier to navigate and find items & pages
  • New and improved News & Updates page to make it easier to read our Newsletters and Client Corner articles
  • Improved features and optimizations for browsing our website on mobile devices

The most popular part of our website has been Schedule a Meeting. You now have several options through our website to schedule meetings at your convenience. In addition, we have added “Update Meeting via GoToMeeting”. While we enjoy and prefer face-to-face meetings in our “Kempville” family room, we can bring our family room to your family room through GoToMeeting. All you need is a Wi-Fi/Internet connection and a smartphone, tablet or computer and we can have face-to-face meetings as if you were actually here in the office. You do not have to be “tech savvy” as Wyatt has been able to walk people through the necessary steps to establish a connection with ease. For those of you at a distance from our office, we believe it’s a great way to see one another and get updated on all the current affairs.

As a client of Kemp Financial Management, LLC, you received your copy of our ADV Part II at the time you opened your account. Every year, we offer a complimentary copy of our most recent ADV Part II for your review and files, which has been updated on our website. You can download the document so you can view and save it by clicking here. It is always available on the bottom footer section of every page of our website along with our Privacy Policy.

If you would like to receive a copy of our ADV Part II by mail, please contact Wyatt Kiedrowski at or by phone at 714 -257-0800.


Can you believe it’s already April? It seems like just yesterday we wished you a Happy New Year. Unlike the start of 2017, it has been a bumpy ride and we would like to explain the first quarter of 2018.

Frankly, we were spoiled in 2016 and 2017. From March 1, 2016 to January 31, 2018 (23 months) there was only one negative month (October 2016). This meant, every time you had an update meeting, or checked your account balance, received a statement or watched the news, chances are strong your account balance was higher than the last time you checked. While we probably did not stress this enough during the uptick in the markets, the 23 month stretch we just had was an anomaly.

The first quarter of 2018, has not looked at all like the prior 23 months. We have witnessed volatility once again, which candidly is more of the norm than 23 months of straight gains. It may take some getting used to once again since it’s been a while. For it seems like every day there is a new reason to celebrate or a new reason to be cautious. While the day-to-day movements of the markets do not change a thing for long-term thinkers like you, it sure continues to reinforce paying attention to your long-term desires versus the day-to-day swings is very important once again.

In February, we sent a video email (it was the most viewed/read piece in the last several years) discussing the crazy gyrations of the markets. We felt that it was important to once again, shift the focus from the day-to-day to the long-term. We received tremendous feedback from many of you thanking us for the comments, but also reminding us, your lives do not change based upon the day-to-day. Most of the comments were simply, “Thank you, but fortunately my life does not revolve around the market.” To that we say, “Well done!”

Going forward, we do believe the markets will probably continue the gyrations we have seen most recently in the first quarter of 2018. We need not remind you that we do not have the proverbial crystal ball, nor do we forecast the movement of the markets. But what we do know is that interest rates, according to the Federal Reserve, will probably be rising moderately. While we do not believe the rise in rates will cause the markets to falter, we do believe there is confusion as to what the overall effect higher interest rates will have on future earnings.

We have been in a declining interest rate environment, essentially since 1981. This is, perhaps, the first time investors have had to deal with an interest rate environment which may be moving in a direction other than down. Consequently, we do feel this creates confusion in the markets and therefore may generate continued volatility.

Another factor thrown into the “confusion” territory is the most recent announcement related to Trade Tariffs. Many argue this is good for certain industry groups, while bad for others. Regardless of your position of “good” or “bad”, it is an additional area of uncertainty.

With uncertainty, many will discuss the “market hates uncertainty.” Yet others will profess “Wall Street climbs a wall of worry.” Or better yet, “It’s the Wall Street Waltz. Two steps forward, one step back.” Who is right? Once again, let’s not focus on the day to day, but focus on where we will be three, five, ten, fifteen or twenty years from now.

Sam celebrating his 26th birthday

Sam celebrating his 26th birthday

Life is moving ever so fast. Our oldest child just celebrated his 26th birthday. Part of the celebration included watching old family videos. The video of choice for the evening was watching the few days before going to the hospital and coming home with a brand spanking new child. Talk about uncertainty . . . how are we going to raise this child? Will he sleep? How much should he be fed? How do you even raise a child? How are we going to get him through college? Where’s the instruction manual? 26 years have gone by in an instant. Thankfully he is a college graduate, happily married, employed and contributing to his retirement plan! By the way, the Standard and Poor’s 500 index was at 469.10 in March 1992 (Source: Life is good.

Don’t let the day-to-day distract you from what’s most important to you. We look forward to visiting with you in the upcoming days, weeks and months, catching up on what’s happening and planning for your futures.

KFM Newsletter - Looking Forward to 2018

Financial Markets

Most of our conversations with clients have revolved around “When is the next correction going to occur? These returns seem too fast and too good to be true.” While we do not have the proverbial crystal ball, we should appreciate the returns that we have received, as the gains in the market appear to be generated for the right reasons.


If you look back over the last four years, it has only been the last 15 months that have generated the positive results. Prior to this recent period of gains, 2013 was our last good year.  In 2014, we had very low returns and results. In 2015, we gave most of the gains back. By October of 2016, the capital markets were only positive 3% as measured by the Standard and Poor’s 500 Index. For three years, the market essentially moved sideways. While 2016 ended up being a very good year following the election, 2017 was even better.

Candidly, we see the lack of enthusiasm towards the financial markets as a good sign. We would be more concerned if the markets resembled that late 1990s when the mentality was “just get me invested into the market, because there is no where it can go but up.” In the first chapter of the book, Ten Truths: How to Create Financial Independence, I discuss the mentality investors had towards the financial markets. Everyone seemed to believe the capital markets would do nothing but go up. There was no indication the financial markets would correct themselves and the general consensus was all one needed to do was be invested in technology stocks.

That all ended with the implosion of technology companies, that candidly, just ran out of capital before their businesses made money. There was euphoria in the air and investors seemed reckless. We do not see investor behavior or the markets behaving like the late 1990s. Today, investor sentiment is much different. We believe the pessimistic sentiment is actually good. But more importantly, the capital markets are rising for the right reasons.

Here’s why the markets performed well in the past 15 months. We continue to remain in a low inflation, low interest rate environment. Corporate earnings continue to grow in the process. Balance sheets remain strong. Manufacturing levels continue to point towards growth. Gross Domestic Product is increasing. Unemployment levels remain low. Jobs continue to be created. Consumer confidence and spending is healthy. The drivers that move markets higher are clearly in play. We believe this is why we have seen the positive moves in the global markets over the past 15 months.

There are dark clouds that remain in place. The geopolitical issues continue to be in the forefront of the news. In January of 2016 it was Syria. Today it continues to be tensions with North Korea and Russia. While we see these as threats to the emotions of the market, we are hopeful, like everyone, the tensions are relieved and the global economy can continue to expand.

Also in the book Ten Truths, we discuss performance equals market returns plus investor behavior. We know the great recession of 2008 and 2009 shook the confidence of everyone. The memory is still fresh on everyone’s minds. While we do not know where the markets are headed, we do believe we take market returns when we can get them. The rising tide in the financial markets has helped all of our clients with gaining momentum towards their unique, independent desires. To that end, we are grateful for the last 15 months of improving conditions in the financial markets.


Tax Planning for 2018

At Kemp Financial we focus on holistic personalized planning for our clients. Retirement planning is the common denominator for our clients. But most recently, with the passing of the new tax bill, tax planning is currently at the forefront of most everyone’s minds. While the biggest change in the new tax laws are most favorable for small and large businesses, we are still gaining more information as to the benefits for individuals.

During the first quarter of 2018, we will be discussing the new tax laws during your update meetings to see if there are any new laws that will favorably impact you. While we have already found some opportunities, we have been warned by many of the CPAs that there will be technical corrections that follow the passing of this new bill. From their prior experience with tax law change, it will take several months before we know exactly what the impacts from the most recent bill will have on you and your personal situation.


Our Book

We have received positive feedback from those of you that have taken the time to read Ten Truths: How to Create Financial Independence. We have enjoyed discussing the content over the phone and during our regular update meetings. Thank you for the comments and we hope you keep them coming.

Several of our clients have bought the book through Amazon. While we appreciate the book sales, we do want you to know if you would like a copy of the book for a family member, colleague or friend, simply contact Wyatt for an additional copy. We have a number of copies available and hope that it will provide insights and transformation for people that are in your inner circle.  If you have not done so already, please view the brief video introduction of the book on our website at


We have upgraded our technology to bring our “family room to your family room”. While we prefer having all meetings at our offices, we recognize that not everyone has the ability to get to our office, whether it is scheduling conflicts or just simply due to location. Over the past 20 years, many of our clients are no longer located in Southern California, having moved to more tax friendly states or simply to be closer to family.


With the help of GoToMeeting, we can bring our “family room” experience to you through any portable device. Whether it be your mobile phone, tablet or computer, we can have a video conference that will allow us the opportunity to see one another as well as work through the update meeting data together. Again, this is not meant to replace the face-to-face meetings that we prefer, but an opportunity to have a similar feel in an environment that can accomplish the same goal.

If you have not done so already with previous meetings, you can always schedule your update meetings through our website at or by clicking the “Schedule Meeting” on our website header or Contact page. We have also added a “GoToMeeting” option through the appointment setting process. Please visit our website to schedule your next meeting.

New Statements

You will notice new statements this year which are a little more comprehensive than the statements you have received in the past. We have been using the new statements in our update meetings for the past several months, so you may have some familiarity with the new look and feel.

The online access to information has also been upgraded. For those of you using the Schwab website to access information for your account, we would highly recommend that you give the new site a try. To login, go to the “Account Login” page of our website ( and click the button to log in to your account under the Loring Ward logo. If you have not logged in to the new site, you will have a new username and temporary password.

Your Username is the first initial of your first name + your last name + DOB (all 8 digits) with no spaces. The username is NOT case sensitive.

Username Example:  For Jane Smith born on June 15, 1946 = jsmith06151946

Your Temporary Password is your Advisor’s last name (first letter capitalized) + 2017. This password is case sensitive.

Temporary Password for Advisor Rob Kemp = Kemp2017

Once you have logged on, you will be prompted to update your password. Please contact Wyatt should you need any assistance in gaining on line access to your accounts through our website.


We look forward to 2018 and all that it has to offer. We look forward to seeing you in the upcoming weeks and months, whether it be in person, by phone or through “GoToMeeting”.

Until then, we wish you the very best of health, happiness and success in the New Year and beyond!

Client Corner: Hurricane Harvey


Family is extremely important to Ron and Bev. They have two married children; one in Houston, Texas the other in Yorba Linda. They have six grandchildren between the two families with the majority of the birthdays in August through October. We have known Ron and Bev for over twenty-two years and we can attest they have spent a significant amount of time traveling with their family, before and after grandchildren. The stories are endless. They have done cruises, European vacations and state side vacations with their children and grandchildren as long as we can remember.

Ron and Bev had their normal travel plans established for this summer, with a plan to celebrate their oldest grandchild’s 14th birthday in Houston. Their goal was to celebrate and then make it back to California for the birth of their sixth grandchild due at the beginning of September. Since Shaun’s birthday was on the 25th of August, they would have plenty of time to get home for the birth. On paper, it was a very plausible plan.

Ron and Bev arrived a few days early for the celebration. Shaun’s birthday celebration began with his father barbecuing under light rain. Well, this was the beginning of Hurricane Harvey. While the rain did not interrupt the birthday celebration that evening, Ron and Bev called it an evening at about 9:00 pm.

As Ron and Bev slept the night away, the rain and winds came. The heavy rains that we witnessed in the comfort of our living room on television fell constantly overnight. The neighborhood streets began to overflow with water and flood.

Yamamoto House with Caption.jpg

The home they stayed in, directly across the street, was not impacted by the flooding that took place in the neighborhood. However, their children’s home is a vintage home built in the 40s. The water rose 36 inches overnight, which unfortunately was about 2 inches above their foundation. The house was completely flooded. The electricity went out, but fortunately was restored after 24 hours. 

Everyone chipped in to move furniture out and away from the flooding that entered the house. Unfortunately, by the time the furniture was removed, it had already been “touched” by the “black water” that came from the flood. Basically, anything in the house that had any contact with the “black water” was destroyed. All of the flooring, walls and furniture will need to be replaced due to the flooding. The house will probably be torn down and a new one built in place of it.

Probably the biggest loss was for Shaun. Unfortunately, all of Shaun’s memorabilia from his younger years was damaged. Shaun, being the determined young man that he is, is doing his best to restore as much as possible. 

Ron and Bev were planning to come home on Wednesday following Shaun’s birthday. But as you heard on the news, all flights were cancelled. Everyone that was trying to fly from Houston had significant delays. Ron and Bev did book a flight for Saturday which once again got cancelled. They decided to try Bush airport other than Houston Hobby and they were successful for Sunday.

Unfortunately, they were not able to get home in time for the birth of Tucker David, but arrived home just in time to welcome the family home from the hospital. They were able to help the week they got home by entertaining the other grandchildren throughout the week.

Now that this is behind them, they have already scheduled travel plans with their children and grandchildren in November on a Disney Cruise hosted by Focus on the Family.

We’ve had two additional clients that have had children impacted by Hurricane Harvey and another client in Florida due to Hurricane Irma. All of them are fine physically, but they are emotionally drained by all of the decisions that need to be made due to the flooding. Our thoughts and prayers continue for all of the people affected by the terrible natural disasters, specifically our clients and their families!

KFM Newsletter: Security, A Book, and A Change


In light of the Equifax breach, we want you to know we’ve got your back. In working with our custodians, all transactions that are outside of normal activities for your accounts, verbal instructions must be received for all other transactions directly from you. All emails requesting distributions, address changes, account information or portfolio values must be verbally authorized by you. You may have already noticed when making request by email or when leaving a voicemail message, someone from our office has reached out to you to verify your request. The same holds true with our custodians (such as Charles Schwab). All of them have procedures in place to protect and prevent fraud.

For Schwab account holders, please review Schwab’s Security Guarantee


We encourage you to contact your bank, credit card companies and other financial institutions to find out what protections are in place for your accounts. Some of our clients have found very little protection by smaller institutions which have caused them to think twice about working with them going forward.

You should also be on guard for an increase in phishing scams by email or phone. If anyone contacts you for financial information you should always be suspicious. If questions are asked that can jeopardize your personal security, you should immediately delete the email or hang up the phone. Report the email as spam and/or do your best to identify the phone number of the caller using Caller ID.

We are also providing the following suggestions to you, and encourage you to take action to protect your information:

  • Check to see if your information has been exposed at
  • Enroll in Equifax’s credit monitoring service, made available at no cost.
  • Remain vigilant in checking your financial statements and accounts for unexpected activity and changes to addresses, beneficiaries, et cetera.
  • Consider requesting a credit freeze to prevent potentially fraudulent accounts from being opened in your name. A fee may apply.
  • Consider changing your passwords to your online accounts.
  • Stay wary of email announcements which may be phishing attempts – some may even appear to be from Equifax concerning the breach. Go directly to websites rather than clicking links provided in emails.
  • Warn friends and family members who may be more vulnerable to scams.

For additional information, visit

Unfortunately, cyber-crime is a reality we all face. However, proactively taking steps to protect your information can go a long way toward ensuring your online safety.


10 Truths: How to Create Financial Independence

Have you ever wondered what the 10 Truths are to being a successful investor? As promised at the beginning of the year, 10 Truths: How to Create Financial Independence by Robert J. Kemp has been completed. You can get a sneak peek by clicking here. We are currently in the process of ordering enough copies for each of our clients. We will also be hosting a “book party Open House” at our office November 15, 2017. Please save the date and be on the lookout for more details to follow. You can also visit the 10 Truths Book page on our Website.

Farewell to SagePoint

After thorough and thoughtful consideration, Kemp Financial Management, LLC has terminated its relationship with our broker/dealer, SagePoint Financial Inc., effective September 30, 2017.  The motivation behind this decision is to streamline our organization while eliminating unnecessary confusion for our clients. This decision does not impact you, our valued client, in any way. We thank our colleagues at SagePoint for the many years of friendship and loyalty to our firm.

While there is no fiscal impact to Kemp Financial Management or to our clients, with this change you will notice our letterhead, website, and new account documentation will be modified accordingly. We believe this decision will simplify our processes and allow for clearer messaging to our clients, as well as open up additional technology enhancements for all new and existing accounts going forward.

While we feel it is important to keep you informed as to any changes made within our firm, you will not need you to sign any documentation to effect or approve this change. Should you receive any communication from SagePoint in the future, you may simply disregard it.

We believe this move is also consistent with the new Fiduciary Standards set forth by the Department of Labor earlier this year. While the new standards are still yet to be determined, we feel moving in this direction is more consistent with the fiduciary standards already in place at Kemp Financial Management.

Your attention to this matter is greatly appreciated. Please feel free to give us a call should have you any further questions.

Ladies Night Out

What Matters Most: Ladies Night Out at “Concert Under the Stars” at Cal State Fullerton was a huge success.  What started with one table eight years ago has now grown to four.  Thank you to everyone for your participation. It was a great night and we look forward to hosting next year’s event in September 2018. And yes, we will see if we can get closer to the dance floor.


Annual ADV Part II and Privacy Policy Announcement
As a client of Kemp Financial Management, LLC, you received your copy of our ADV Part II at the time you opened your account. Every year, we offer a complimentary copy of our most recent ADV Part II for your review and files. In addition, we are also required to provide you with Kemp Financial Management, LLC’s current Privacy Notice. Please contact Wyatt at 714-257-0800 or by e-mail at in the event you would like to update your files with our most recent ADV Part II and Privacy Policy. Both are always available in the footer section of our website.

Client Corner: Giving Back


Long-time clients Andy and Heidi Nickerson have two children, Kyle, a Junior at Troy High School and Megan, a Freshman at Orange Lutheran. Andy and Heidi lead very active lifestyles with Andy as the President of HdL Companies and Heidi’s involvement in multiple community organizations along with the management of the Nickerson household. Andy’s work requires an incredible amount of travel, yet both manage to find time each summer to provide a water experience for local high schoolers.

Andy and Heidi have been involved in a summer activity with their local church for 5 years. Their church sponsors a week long waterski camp in July. Andy and Heidi volunteer as boat drivers for the week and help students learn how to wakeboard, waterski, wake skate and wake surf.

Typically, there are 60 to 70 high school students that attend camp each year. There are generally four additional boat drivers working together to get as many kids as possible out on the water. The typical day starts with student runs on the water from 6:00 am to 8:00 am. From 9:30 am to 11:00 am, the assistants that run the camp have their runs on the water. That is immediately followed by student runs from 11:30 am to 5:00 pm. It’s not uncommon to put in 40-50 hours of boat time at the camp for the week. Due to the Southern California drought, the camp has been going to Lake Camanche near Lodi, California with an 8 hour drive each way from Orange County. This is anything but a relaxing week on a lake.

This summer marked Andy and Heidi’s 5th year volunteering as boat drivers for the camp. Rob and his wife, Diane, originally talked them into volunteering for camp. Andy and Heidi started out very skeptical about going because they did not think spending a week with 70 high school students sounded like fun. However, after their first year, they were hooked and now they look forward to camp each year.


Before their own children were old enough to go to the camp, a family member would stay home with them while Andy and Heidi were away. They usually tried to arrange for their children to be at day camp during the week of the waterski camp to make it easier for the family member taking care of them. After their youngest graduates from high school, Andy and Heidi think they will continue going to camp. It is something they look forward to each year and they get to serve alongside so many incredible people. It is hard for them to imagine not going.

They love getting to know the students and watching them enjoy their time out on the water with their friends. The kids are so encouraging and supportive to each other. It has been fun for them to watch the incoming freshman mature over their four years at camp and even see some of them come back to work on the servant’s team.

Every year there are several students who are unable to get up on a wakeboard. They try over and over, get instruction from the various boat drivers, but they just can’t do it. Andy and Heidi’s best memories from camp are when they can get one of those kids up, see the big smiles, and hear their fellow students cheer for their accomplishment.


Andy and Heidi started a tradition in their first year by having students sign their wakeboards. Many students have signed them and quite a few students have signed multiple times. The kids seem to enjoy signing the wakeboards, and it provides Andy and Heidi with a lasting reminder of their time with the students.

They look forward most to seeing the kids develop closer bonds with each other and their leaders, worship together, and grow in their relationship with God. It takes a tremendous amount of work to pull off camp every year, but the results make it all worthwhile. When they return home from camp, Andy and Heidi are completely exhausted and it usually takes them three or four days to recover.

Thank you Andy and Heidi for your hard work and dedication to your church and community!

KFM Newsletter: What Matters Most - Time With Family And Friends

It is hard to believe we have already finished the first half of the year. Christmas and the New Year will be here before we know it. A lot has happened in the first part of the year. The major market indices have remained in positive territories, with slight advancements over the first quarter. More importantly, we have celebrated 30 and 50 year anniversaries, work advancements, retirements, graduations, incredible travels and a lot of birthdays. We hope that the remainder of the year continues to bring you, good health, happiness and fulfilment of what matters most in your lives.


During the last quarter, our What Matters Most: Family Fest 2017 was a great success! We had over 50 participants at Golfer’s Paradise in Fullerton for our Putting Contest and barbeque. The weather cooperated and lots of stories and good times were shared. We had an unbreakable tie for the women, hence eight winners and an extremely low score for the men. It’s always a pleasure to have a great time together at this event. We hope you can make the next one!

We have fielded several questions this year about the impact of rising interest rates and how that might affect credit cards and mortgages. In addition, while reviewing our client’s estate plans and the potential for tax law change, clients have asked if any changes will be made in the future. While this has been a moving target for the last several years, we do not know at this time whether any adjustments will be made. As we know more, we will continue to keep you informed. Lastly, from some of our car enthusiasts, we have had more than one conversation about fuel efficient automobiles.


You've probably heard the news that the Federal Reserve has been raising its benchmark federal funds rate. The Fed doesn't directly control consumer interest rates, but changes to the federal funds rate (which is the rate banks use to lend funds to each other overnight within the Federal Reserve system) often affect consumer borrowing costs. Forms of consumer credit that charge variable interest rates are especially vulnerable, including adjustable rate mortgages (ARMs), most credit cards, and certain private student loans. Variable interest rates are often tied to a benchmark (an index) such as the U.S. prime rate which typically goes up when the federal funds rate increases.

Although nothing is certain, the Fed expects to raise the federal funds rate by small increments over the next several years. However, you still have time to act before any interest rate hikes significantly affect your finances.

Adjustable rate mortgages (ARMs)

If you have an ARM, your interest rate and monthly payment may adjust at certain intervals. For example, if you have a 5/1 ARM, your initial interest rate is fixed for five years, but then can change every year if the underlying index goes up or down. Your loan documents will spell out which index your ARM tracks, the date your interest rate and payment may adjust, and by how much. ARM rates and payments have caps that limit the amount by which interest rates and payments can change over time. Refinancing into a fixed rate mortgage could be an option if you're concerned about steadily climbing interest rates, but this may not be cost-effective if you plan to sell your home before the interest rate adjusts.

Credit Cards


It's always a good idea to keep credit card debt in check, but it's especially important when interest rates are trending upward. Many credit cards have variable annual percentage rates (APRs) that are tied to an index (typically the prime rate). When the prime rate goes up, the card's APR will also increase. Check your credit card statement to see what APR you're currently paying.

Variable Rate Student Loans

Interest rates on federal student loans are always fixed (and so is the monthly payment). But if you have a variable rate student loan from a private lender, the size of your monthly payment may increase as the federal funds rate rises, potentially putting a dent in your budget. Because repayment occurs over a number of years, multiple rate hikes for variable rate loans could significantly affect the amount you'll need to repay.

Because interest rates are generally lower for variable rate loans, your monthly payment may be manageable, and you may be able to handle fluctuations. However, if your repayment term is long and you want to lock in your payment, you may consider refinancing into a fixed rate loan. Make sure to carefully compare the costs and benefits of each option before refinancing.


While no one can predict the future, the possibility of tax reform is once again in the spotlight. If it occurs, it may very well include repeal of the federal estate tax and related changes to the federal gift tax, the federal generation-skipping transfer (GST) tax, and the federal income tax basis rules.

History of the Federal Estate Tax

In general, an estate tax is a tax on property a person owns at death. In one form or another, a federal estate tax has been enacted or repealed a number of times since 1797.

 Estate tax enacted     Estate tax repealed

1797                             1802

1862                             1872

1894                             1902

1916                              2010*


*For 2010, the estate tax was repealed, but later retroactive legislation provided that an estate could elect to be subject to estate tax in return for a stepped-up (or stepped-down) income tax basis for most property. The estate tax was extended in 2011, with some changes.

The estate tax has undergone many changes over the years, including the addition of a federal gift tax and a federal GST tax during modern times. A gift tax is a tax on gifts a person makes while alive. A GST tax is a tax on transfers to persons who are two or more generations younger than the transferor. In recent years, property owned at death has generally received an income tax basis stepped up (or down) to fair market value at death.

During the 2000s, the estate, gift, and GST tax rates were substantially reduced, and the gift and estate tax lifetime exclusion and the GST tax exemption were substantially increased. The estate tax and the GST tax, but not the gift tax, were scheduled for repeal in 2010 (although certain sunset provisions would bring them back unless Congress acted), but legislation extended the estate tax and the GST tax in 2011. (For 2010, the estate tax ended up being optional and the GST tax rate was 0%.) The gift and estate tax lifetime exclusion and the GST tax exemption were increased to $5,000,000 and indexed for inflation in later years. For 2013, the top estate, gift, and GST tax rate was increased to 40%, and the extension and modifications were made "permanent."

 2017 Estate Planning Key Numbers

 Annual gift tax exclusion:   $14,000

 Gift tax and estate tax basic exclusion amount:  $5,490,000  

 Noncitizen spouse annual gift tax exclusion:  $149,000

 Generation-skipping transfer (GST) tax exemption:  $5,490,000

 Top gift, estate, and GST tax rate:  40%

Federal Estate Tax

Repeal of the estate tax seems possible once again. If repeal occurs, it could be immediate or gradual as during the 2000s. Would it be subject to a sunset provision, so that the estate tax would return at a later time? All of this may depend on congressional rules on the legislative process, other legislative priorities, and the effect the legislation would have on the budget and the national debt.

Federal Gift Tax


If the estate tax is repealed, the gift tax may also be repealed. However, it is possible that the gift tax would be retained as a backstop to the income tax (as in 2010). To some extent, the gift tax reduces the ability of individuals to transfer property back and forth in order to reduce or avoid income taxes.

Federal GST Tax

If the estate tax is repealed, the GST tax would probably be repealed (as in 2010). If the gift tax is not repealed, it is possible that the lifetime GST tax provisions would be retained, but the GST tax provisions at death repealed.

Federal Income Tax Basis

If the estate tax is repealed, it is possible that the general income tax basis step-up (or step-down) to fair market value at death would be changed to a carryover basis (i.e., the decedent's basis before death carries over to the person who inherits the property). In 2010, a modified carryover basis (a limited amount of property could receive a stepped-up basis) applied unless the estate elected to be subject to estate tax. It is also possible that a Canadian-style capital gain tax at death could be adopted in return for a stepped-up basis for the property.



You're searching for a new car and interested in fuel-efficient vehicles. On the surface, they sound like a good idea: You may save money by making fewer trips to the gas station, and you'll help protect the environment. However, there are pros and cons to owning and driving a fuel-efficient vehicle, particularly when it comes to your finances.

Know Your Options

Many different vehicles fall into the fuel-efficient category. There are electric vehicles (EVs), which run solely on electricity and produce zero emissions, Hybrids (traditional and plug-in), which have a small internal combustion engine as well as batteries that power an electric motor, and alternative fuel vehicles which run on diesel, bio-diesel, ethanol, compressed natural gas, or hydrogen fuel cells.

Weigh the Advantages Against the Disadvantages


One of the biggest factors in deciding whether to buy a fuel-efficient vehicle is cost. Generally, fuel-efficient vehicles come with a higher purchase price that can be off-putting when comparing them to standard vehicles. And if your fuel-efficient car is equipped with an expensive battery, you must be prepared to pay even more when the battery eventually needs to be replaced. Other drawbacks include scarcity of public chargers, limited driving range, and fewer model options to choose from (as opposed to traditional vehicles).

On the other hand, driving a green vehicle could add some green to your wallet. Many EVs and hybrids qualify for a federal income tax credit. Depending on your vehicle's battery capacity, you could earn a credit ranging from $2,500 up to $7,500. However, certain restrictions do apply. For more information, see IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit.

Your auto insurance provider may also offer discounts if you drive an EV or hybrid. It's worth checking to see whether you will save on insurance by driving a fuel-efficient vehicle.

Decide What Suits your Lifestyle

Financial considerations aside, think about what kind of car best fits your needs. To help decide, ask yourself these questions:

  • Can you afford a more expensive fuel-efficient vehicle, or does it make more sense to buy a conventional vehicle?
  • How much driving do you do in a typical week?
  • Do you want an EV or a hybrid? Or do you want to consider an alternative fuel option?
  • If you choose an EV or plug-in, are you able to charge it at home? If you frequently drive longer distances, will you be able to recharge it easily on the road?
  • When will you need to replace the battery in your vehicle? How expensive will it be?

If you don't drive your vehicle on a consistent basis, you might consider sticking with a conventional vehicle. For example, after just one week of not driving an EV or hybrid vehicle, the battery could be affected and may not function properly.

THE MARKETS (as of Market Close June 30, 2017)


The second quarter proved to be a bit bumpy for equities, but each of the benchmarks listed here closed the quarter ahead of their first-quarter closing values. April saw equities close the month ahead of March, buoyed by favorable corporate earnings reports, proposed tax cuts, and strong foreign economic advances.

Nasdaq led the way posting monthly gains of 2.30%, followed by the Global Dow, which gained almost 1.50%. The large-cap Dow advanced 1.34%, ahead of the S&P 500, which increased close to 1.00% for the month. Even the small-cap Russell 2000, which has had some rough weeks, closed April 1.05% ahead of its March close.

June saw mixed results for the indexes listed here. The Nasdaq lost almost 1.00%, while the Russell 2000 made up for its May losses, advancing almost 4.00% over May. The Dow had a strong June, closing the month up 1.62%, while the S&P 500 and the Global Dow failed to advance 0.50% over May. Long-term bond prices increased in the second quarter with the yield on 10-year Treasuries falling 8 basis points. The price of gold fell during the second quarter, closing June at $1,241.40, down from its $1,251.60 closing price at the end of the first quarter.

 Market/Index       2016 Close       As of June 30       Month Change       Quarter Change       YTD Change

 DJIA                     19762.60          21349.63                 1.62%                      3.32%                       8.03%

 NASDAQ              5383.12             6140.42                  -0.94%                    3.87%                      14.07%   

S&P 500                2238.83           2423.41                    0.48%                    2.57%                        8.24%   

Russell 2000        1357.13              1415.36                    3.30%                     2.12%                        4.29%   

Global Dow           2528.21            2769.39                   0.38%                     2.90%                      9.54%   

Fed. Funds            0.5%-0.75%     1%-1.25%                  25 bps                    25 bps                     50 bps   

10-year Treas.        2.44%              2.3%                        10 bps                    -8 bps                      -14 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. As always, we look forward to meeting with you in the upcoming months.

Client Corner: Pageant of the Masters


Ray and Karen were introduced to KFM about three years ago through their good friends, Art and Terry. Ray and Karen are quite the go getters with their respective careers as well as their dedication to fun and travel. Even with their busy schedules, they have found time to volunteer and participate in the Pageant of the Masters in Laguna Beach, California.

For those not familiar with the Pageant of the Masters, it is arguably one of the most unique productions in the entire world. On each evening of the Festival of Arts summer schedule, guests are amazed and enchanted by ninety minutes of tableaux vivants (living pictures), incredibly faithful re­creations of classical and contemporary works of art, with real people posing to look exactly like their counterparts in the original pieces. 

An outdoor amphitheater, professional orchestra, original score, live narration, intricate sets, sophisticated lighting, expert staff and hundreds of dedicated volunteers have won recognition for the Pageant of the Masters as the best presentation of its kind. This 2017 summer season will be Ray’s 10th season and the 16th for Karen.

Karen got her start while living in Laguna Beach. Every January she would regularly see the casting call signs throughout Laguna. One year, she decided to take a chance and try out. Evidently she made the right impression as she was called a few months later and cast in a painting by Winslow Homer called “The Lifeline”.  

Ray got involved several years later. When Karen and Ray started dating, Karen explained to him that she volunteered every summer and that was how she spent her evenings in July and August. During their first summer together, Ray went with her to the Pageant each night and sat on the cast patio watching from behind the scenes.  While getting to know many of the regulars, he learned they had a mutual friend who just happened to be cast as “Jesus” in the Last Supper. That marked the beginning for Ray as he couldn’t have received a better endorsement than that!


The following January, Ray decided to join in the fun and try out. A few months later, they got a call to be cast together in a sculpture called “Fiesta”. The presentation showed a man and woman doing a Mexican hat dance, a perfect beginning for the two of them. Karen and Ray both agree that was their favorite year. “It was Ray’s first year, we were dating, we were in love and we had lots of fun.  It made it a very fantastic summer.” (Image of “Fiesta” by Luis Jimenez to the right)

To get prepared each year, Ray and Karen are called in May or June for a costume fitting. They are put into the actual set to double check sizing and comfort with their designated pose. After that, there is a daytime walkthrough rehearsal with the entire cast to fine tune timing. A week before the show begins, there are two dress rehearsals with full makeup, costumes and lighting. Each performance requires 20 to 30 minutes of preparation before the show, which includes full makeup, costume and a headpiece. The actual performance time for each show varies each year but usually entails a minimum of 90 seconds to as much as five minutes. There have been years when Ray and Karen have been cast in multiple pieces, which require them to do quick changes and causes them to remain at the Pageant quite a bit longer.

In case you are interested, Diane “Dee” Challis has been the Director/Producer of the Pageant since 1995 and makes all final decisions. Diane will allow cast members to be a part of the annual research committee, which is also very fun and educational. There is full-time, year-round staff that creates the costumes, headpieces and makeup. Some are re-used, but most are created new each year. The parts are assigned by the Casting Director. No one is guaranteed a part, and everyone must try out every year. They start by building the sets and then figure out the people that will best match the set. Cast members range anywhere from four years old to people well into their nineties. Anyone can try out. The casting call is generally three evenings in the first or second week of January. If you cannot make the casting call, you can call the casting office to make an appointment. (Image to below:  Ray and Karen in “National Statuary Hall” at the 2015 Pageant of the Masters. Ray was King Kamehameha (far right) and Karen was Esther Hobart Morris (second from right).)


The most difficult year was the year Ray was cast as “Sasquatch” in a live action sequence on the hillside.  He had to take off the costume before coming back into the casting area because he scared the small children!  Karen’s most difficult year was when she volunteered to be a backstage runner and had to herd eight little kids into their costumes in the dark and get them to not talk and stand still. 

They have never needed to take time off work to be a part of the Pageant.  All rehearsals are on week nights at 7:00 pm, and summer performances are at 8:30 pm. They have had so many great memories as volunteers.  “Once you’re cast, you very much become family.  We’ve made friends for life, celebrated birthdays, graduations, weddings and even mourned the loss of many over the years.  We feel very fortunate and grateful to be able to participate.”

Karen and Ray would encourage everyone to try out if you have an interest. “It’s a substantial time commitment in the months of July and August, but worth every minute when you get to be a part of a one of kind show. It’s a family atmosphere and once you’re in, you become a family member and you’ll want to return each year.”

For those of you that would like to attend this year’s Pageant of the Masters that will run July 7th to August 31st, look for Ray in a Duke Ellington Statue that will rotate next to the main stage and Karen in a sculpture titled “Apollo and the Nymphs”.  While Ray and Karen have many favorites over the years, “The Last Supper” painting is traditionally done each year at the close of the show. Diane and I plan to attend this year so that we can see Ray and Karen perform first hand.

Thanks Karen and Ray for sharing your Pageant of the Masters experience with all of us! 

Client Corner: Honor Flight

Larry Trine, a client of KFM for over 22 years, was last featured in a Client Corner email back in 1995 when Larry (a great golfer) “shot his age” 3 times in the same month. This is quite an achievement and an admirable goal for every golfer.  

When we had our last update meeting, Larry shared that he had been invited to participate in Honor Flight by his close friend, Tim Daniels. Honor Flight is a non-profit organization dedicated to providing veterans with honor and closure. Their mission is to transport America’s Veterans to Washington, DC to visit those memorials dedicated to honor the service and sacrifices of themselves and their friends.

Larry wasn’t quite convinced he should participate, since he wasn’t part of the action in the World War II as it ended shortly after he volunteered. But his daughter encouraged him because of the honor he was bestowing on all of this friends and family that had also served our Country. You could only imagine that I had to follow up with Larry after he got home so we could share about his trip with you.


Two weeks prior to Larry’s trip, all of the participants were gathered together as a “meet and greet”. Each Veteran received the opportunity to share the name, rank, duties and experiences as a Veteran serving our Country. The leader of the trip explained all the details of the trip and each participant was provided a jacket and two shirts with instructions on what to wear for each event. Each of the participants was provided a “guardian”. In Larry’s case, it was his good friend, Tim. The guardians were appointed to make sure all of the travel was smooth and to make sure each participant was well cared for.

Larry boarded the plane to DC in San Louis Obisbo, California. The first leg was to Phoenix, Arizona where the plane was greeted by a water cannon showering the plane as it pulled into the gate. As they went to their next plane, 100 people were at the gate to cheer them on as they departed on their flight to Baltimore, Maryland. When their plane landed in Maryland, they were greeted by yet another water cannon.

The first night they had a dinner at the Hilton, which again gave the opportunity to meet all of the Veterans on the trip along with their respective guardians. The next morning, they experienced the Changing of the Guard at Arlington National Cemetery, a first for Larry. They toured the Vietnam, Korean and World War II Memorials. Larry was greatly impressed by the volunteers that answered any and all questions posed by the Veterans. The finished the day with an up close and personal tour of the Washington Monument where they learned how and when it was constructed.


The following day they boarded a bus to Annapolis where they toured the entire facility. Larry was most impressed by the church located in the center of the property. The church had the largest pipe organ he had ever seen with 150 stops. In Larry’s words, the Chapel Organist, Monte Maxwell, was a “virtuoso” playing Bach and Beethoven like nothing he has ever heard or witnessed before. The day was completed by spending the evening at the National Air and Space Museum when stories were shared by all the participants. The two days were “hard to believe” for Larry. It was such a feeling of honor to be a part of the group.

On their way back home on the trip from Baltimore, the leader of the trip yelled out “Mail Call” in the middle of the flight. Letters from family, friends and strangers were handed to each of the Veterans on the trip. Larry was most impressed by one of the letters he received from a grade school student who wrote a full page letter. What impressed Larry the most was the understanding that “there are teachers out there that care about the past and are teaching young students about the wars and why the students ought to be grateful for what all of the Veterans have done.”


Once they reached Phoenix, they once again were greeted by a water cannon and each Veteran was introduced as they walked into the airport. Once again, a crowd was gathered to cheer them on. When they arrived back in San Luis Obispo, they were greeted a final time by a water canon on the runway. Two armed officers in full uniform saluted each veteran as they walked off the plane. The local police and fire departments had also gathered to welcome them home.

One could only imagine this trip for Larry was an incredible honor and perhaps a bit surreal. While there were no political speeches or grandstanding done by anyone along the trip, it was the thrill of a lifetime for Larry.

Larry, thank you for sharing your story and for serving our Country!

Client Corner: Dont Worry, He Won't get Far on Foot

For almost 20 years, I had the pleasure and opportunity of working with Chuck and Lois Dunn. While working with them, I got to hear the many stories they shared about their two daughters, Kathy and Patty. Within the last 5 years, I have had the pleasure and opportunity to get to know each of them better and I understand why Chuck and Lois were so proud of their children.

Kathy Dunn recently retired from the San Diego VA Medical Center as a Spinal Cord Injury Clinical Nurse Specialist after 43 years as a nurse, including 28 at the VA. Rather than sleep in on her first day of retirement, she was summoned to superior court Jury Duty, a rude awakening to retirement. If that wasn’t enough, Kathy was recently informed she will be on the federal jury duty call list for the entire month of June. However, since she retired, she has had some fun along the way.

Calling Kathy a “Movie Buff” is probably not giving enough credit where credit is due. “Aficionado” is probably a better term. Movies were not just for fun and entertainment for Kathy. She has collected a list of 20 or so movies that deal with spinal cord injuries or disease that she has used over the years to train colleagues at the hospital. Movies like “The Men” from 1950 starring a not so well known actor at the time named Marlon Brando. Other movies include, “Coming Home”, “Passion Fish”, “Water Dance” and “The Sessions”. Ultimately, she felt the movies were good education to provide insights to the staff from the patients' perspectives to better assist in their care. Watching many of the movies, Kathy would be distracted by the setup of the scenes in regards to their accuracies. But for those that met her approval, they were used for instruction.

Due to Kathy’s expertise in SCI care, she was recently contacted to provide technical consultation for a movie to be released in 2018 about the life of cartoonist John Callahan, who suffered from a spinal cord injury. The movie is being made based on Callahan’s autobiography entitled “Don’t Worry, He Won’t Get Far on Foot”.

Kathy has a friend that is a social worker at a San Diego rehabilitation center who also has a side job in Hollywood as a “Voice Actor” doing voice commercials, audio books, etc. Her friend was contacted to see if he knew anyone that had spinal cord expertise and Kathy was contacted shortly thereafter.

John Callahan

John Callahan

Not only does Kathy have Spinal Cord injury expertise, but she was very familiar with the work of John Callahan. She had followed John’s cartoonist career for years through the San Diego Union, New Mobility Magazine and John’s website In fact, back in the day Kathy even had a T-Shirt with the phrase and the famous cartoon “Don’t worry, he won’t get far on foot” on the front. John wrote many books that Kathy had also read, including his autobiography.

Kathy spent one day in Hollywood where she met with the director, Gus Van Sant, and the crew in charge of the set, props, costumes, hair and makeup. The goal was to make the set and actors appear as much like 1972 as possible. She also spent time answering emails from the crew prior to the start of filming. She then spent two days on-set at Daniel Freeman Hospital in Inglewood, which has been closed for years, but is used for movie hospital sets now. Kathy helped with the set dressing and props, saying “yes” to this and “no” to that. She even challenged and helped rewrite a few lines in the script that may or may not be used when the movie comes out.

Kathy met with the lead actor, Joaquin Phoenix, and supporting actress, Rooney Mara. Jack Black and Jonah Hill, who will also appear in the movie, were unfortunately not on set for these particular scenes. She got to see the actors rehearse and then film the actual scenes from the movie. While she spent two full days on set, it will probably only be five minutes of actual footage in the movie. She also spent time answering emails from the directors following her couple of days on set. And yes, she was paid for her involvement in the film and should be included in the credits at the end of the movie. Who knows, maybe a new part-time career has been started.

“To be on set, to see the production process, lighting, rehearsal was lots of fun! I probably would have done it for free.” Congratulations Kathy on your retirement. We hope you have many more experiences like this that are simply unforgettable for years to come.


The John Callahan cartoon whose caption was the origin of the title of the book (and movie) and a couple of Kathy’s favorites:


Client Corner: Will it Float?

Long time clients, John and Susan Sarraffe recently shared a great story about their oldest son, Mark. Turns out, Mark and I share an interest and passion in common. John and Susan updated Lissa and I on his most recent acquisition and work project. We thought it would be fun to share Mark’s newest adventure with you.

Mark is a North Orange County local having attended Esperanza High School. When he was 8 years old, Susan’s father took Mark fishing at a local pond. Mark’s first exposure to fishing was successful as they caught bluegill together without too much trouble. This was the trip that sparked Mark’s passion for fishing.

Mark has always been drawn to the outdoors. Mark enjoys fishing in the ocean out of Oceanside, California and enjoys fresh water fishing in Lone Pine and Mammoth Lakes. Mark’s friend’s father has a boat that allows them to fish 15-20 miles off the coast of California where they catch Yellowfin tuna, Bluefin tuna, Yellowtail, Dorado and occasionally sharks. When he’s not able to fish in the ocean, Mark enjoys Laguna Lake in Fullerton to pursue his hobby. Mark’s biggest fish that he has caught to date was a 25-pound Yellowfin tuna off the coast of Oceanside. He has a fishing pole collection of 2 ocean and 2 fresh water poles and more tackle than you could imagine.


Most recently, Mark got the idea that he would like to buy a boat. Not having the resources as a student, he decided to enlist the financial support of a friend and his father. They all agreed on their limited budget and started their search. A 1978 Starcraft Holiday came up on their search and it was located in a very unlikely spot, Hemet. 

When they arrived at the residence, the boat was sitting in the yard. A widow was trying to find a buyer to remove the boat from her property as it had not been in water in years. The boat was full of trash with an engine that had not been started in years. It is a 22 foot aluminum boat with an inboard engine that nobody was quite sure whether or not it would even float. They were able to agree on a price and off to work they went on the boat.


For starters, they were convinced the engine was not quite good enough to perform the way they intended to use the boat. They decided they would change then engine to an outboard engine which they found on Craigslist. Once the old engine was removed, the new engine was mounted and seemed to run fine.

There was concern over the buoyancy of the boat since it was constructed in 1978 using rivets to hold the aluminum together. So they decided the boat would need lots of Silicone and Caulk. Together, the three of them covered every spot that appeared to be problematic to make sure the boat would not have any leaks. Once completed, they decided it was time for the maiden voyage.

Instead of trying it in the ocean, Mark and his fishing buddies decided it would be best to test the boat at Lake Elsinore. This seemed like a reasonable decision since it would be much easier to swim to shore on the lake (with the exception of the color of the water) rather than swim to the shore in the ocean.  They launched the boat, everything seemed fine in the water and the boat was not showing any sign of leaks. They fired up their new outboard engine and off they went. To make sure it was powerful enough for the ocean, they clocked speeds of up to 45 miles per hour. They pulled the boat back to the marina and declared their maiden voyage a success.

Mark is now greatly looking forward to the summer months where he and his friends will be able to have their own fishing expeditions in the ocean.  He enjoys the time outdoors, on the water, competing with his friends as to who will catch the biggest prize of the day.

Congrats to Mark for pursuing a dream of getting a boat that probably nobody would take and turning it into something useful and enjoyable for many years to come!

KFM Newsletter: Communication DNA to the Rescue

We are one of a select group of advisors who use an innovative technology-based discovery application called Financial DNA rather than going by gut intuition and feel.


One of our 10 Truths is: "Investor behavior plays a predominant role in investment success." Said another way, investment performance equals market returns plus investor behavior. This is supported by research. Meir Statmen, Behavioral Finance Professor and Author states, “93.6% of an advisor’s role is the behavioral management of clients.” Because everyone has a unique relationship with money, the most important factor in helping clients achieve financial success is for advisors to help understand and manage that relationship.

How we accomplish this:

  • Understanding your money motivators and personal risk tolerance
  • Learning about your values, passions, vision, and life experiences
  • Understanding what your financial behavioral biases are (i.e. risk of loss, overconfidence)

As a client, you will: 

  • Be more aware of your financial personality. This helps you make more confident investment decisions and communicate more effectively with your partner and family.
  • Learn how to recognize the motivation behind your financial decisions.
  • Be more disciplined and mindful in your decision making. Avoiding emotional reactions is a secret to success as an investor.
  • Help us understand your communication needs so that we can serve you and your family better.

Our experience has shown that financial success is not just about making good investment decisions. It is also about managing the many psychological and emotional pitfalls we face during the journey.

Immediately following your next update meeting, you will be invited to participate in learning more about your communication preferences. You will receive an email from Wyatt to register and complete a short (5 minute) questionnaire. Upon completion, you will receive a one page report indicating your specific communication style. Your report can be shared with others so that your family, friends and colleagues can better communicate utilizing your distinct preferences. You are more than welcome to get started before your next meeting. Visit the Financial DNA page on our website:


The Putting Tradition Continues

Join us for fun and friendly competition with a BBQ Dinner at The Kemp Financial Management Putting Contest. Mark your calendars for Friday, June 9, 2017 at 4:00 PM. The Putting Contest will take place at the same location as years past, Golfer’s Paradise in Fullerton. We look forward to seeing you there! A formal invitation will follow.

Department of Labor Update

As you may have heard in the news, under a recent proposal, the Department of Labor (DOL) has delayed the fiduciary rule also known as the “Conflict of Interest” Rule until at least June 9th. There has been a lot of media attention tied to this new rule. Here is a brief overview.


DOL: The Department of Labor (DOL) is a U.S. Government cabinet body responsible for administering and monitoring over 180 federal laws, including those which relate to the minimum wage, working conditions, workplace discrimination, retirement, and unemployment. One main body of law the DOL administers and enforces is ERISA (Employee Retirement Income Security Act).

ERISA: The Employee Retirement Income Security Act (ERISA) regulates employers who offer pension and other retirement plans or welfare benefit plans for their employees as well as their service providers. Title I of ERISA is administered by the Employee Benefits Security Administration (EBSA), the DOL agency responsible for overseeing a wide range of fiduciary, disclosure and reporting requirements for pension and welfare benefit plans and on those who have dealings with these plans.

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Objective of the New Rule:  The new Rule is intended to create an environment where investment advice for a client’s retirement account is always provided in the ‘best interest’ of the client.

Clients Affected by the New Rule: Clients include IRA owners, sole proprietors with Keogh or solo plans, as well as plan sponsors and participants in ERISA retirement plans.

A Fiduciary under the New Rule: Fiduciary includes an advisor who is responsible for providing you investment advice with the care, skill, prudence, and diligence of a prudent person. The advice would be based on your investment objectives, risk tolerance, financial circumstances, and needs, without regard to the financial or other interests of the advisor.

How the Rule Affects You as a Client: Under the new Rule, you will receive investment advice that is focused solely on your interests.

As an Independent Registered Investment Advisor, Kemp Financial Management, LLC has always fallen under and adhered to the fiduciary standards. The new rule, once in effect, will have a minor impact to our clients. At its core, the new rule is looking to reduce as many conflicts of interests relating to investment advice as possible. Specifically, the rule is looking to eliminate “commissionable” transactions in retirement accounts. We believe the rule is inherently good and is a best practice principal that has been a part of our tradition, values and beliefs since the mid-1990s.

While many questions have not been resolved, hence the delay until June 9, 2017, rest assured we will continue to follow the fiduciary standards that you have been accustomed to expect.

The Markets (as of market close March 31, 2017)

Riding the momentum following the presidential election, stocks surged for much of the first quarter of 2017. Buoyed by the anticipation of tax cuts and policies favorable to domestic businesses, the benchmark indexes listed here reached historic highs throughout the quarter. At the end of January, the Dow reached the magic 20,000 mark for the first time, while the tech-heavy Nasdaq gained almost 4.50% for the month. The trend continued in February, as stocks posted solid monthly gains. The Dow closed the month with a run of 12 consecutive daily closings that reached all-time highs. The S&P 500 also achieved a milestone — 50 consecutive trading sessions without a daily swing of more than 1.0%. At the close of trading in February, each of the benchmark indexes listed here posted year-to-date gains, led by the Nasdaq, which was up over 8.0%.


March began with a bang but ended with a whimper. The Dow closed the first week of the month at over 21000, while the Nasdaq gained over 9.0% year-to-date. However, energy stocks slipped as the price of oil began to fall. Entering mid-March, investors exercised caution pending the potential Fed interest rate hike and the push for a new health-care law. Following its mid-March meeting, the Fed raised interest rates 25 basis points, while the move to replace the ACA with a new health-care law failed for lack of congressional support.

For the quarter, each of the indexes listed here posted impressive gains over their fourth-quarter closing values. The Nasdaq climbed the most, posting quarterly gains of close to 10.0%, followed by the Global Dow and the S&P 500, which achieved its largest quarterly gain in almost two years. Long-term bond prices increased in the first quarter with the yield on 10-year Treasuries falling 6 basis points.

While we provide this data as “information,” we continue to embrace another truth: “Listening to the financial media causes unnecessary stress.” To a degree, publishing this information in our newsletter potentially adds to that stress. So please take the data as just a “snapshot” of how the quarter ended. What most important is staying focused on the short and long-term goals you have set out for yourself in your Investment Policy Statement.

 Market/Index        2016 Close        As of March 31        Month Change        Quarter Change        YTD Change

 DJIA                      19762.60             20663.22                  -0.72%                      4.56%                      4.56%

 NASDAQ               5383.12                 5911.74                      1.48%                       9.82%                      9.82%         

S&P 500                2238.83                2362.72                    -0.04%                      5.53%                      5.53%

 Russell 2000       1357.13                   1385.92                    -0.05%                       2.12%                        2.12%

 Global Dow          2528.21                 2691.45                      1.36%                       6.46%                     6.46%

 Fed. Funds         0.50%-0.75%       0.75%-1.00%                25 bps                     25 bps                    25 bps

 Treasuries (10 Yr)   2.44%                 2.38%                          -1 bps                    -6 bps                     -6 bps

The above reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

KFM Newsletter: 2016 Full of Surprises

Patience is not my middle name. I was not born with patience, trained to be patient or ever been told that having patience is one of my top character strengths. Just ask my children. If I were to take a career exam today, it probably would conclude that I would have more success as a traditional “stock broker” analyzing stock movements and trading patterns hoping to be a professional day trader rather than be a patient financial advisor. Fortunately, through years of experience, there is no question; I have learned that patience pays huge dividends.

When I was 16 and working at Hacienda Golf Club, I needed to buy a car so that I could get to work. Not any car would do. I found myself attracted to a classic 1967 Datsun Roadster because it was within reach of my measly budget. Since it was a classic sitting in the Datsun showroom, surely it was going to be sold quickly, so impulsively, I needed to have it immediately to call it my own. While it was the dream car of every 16-year-old at the time, it was nothing but a problem from day one.  In the two years that I owned it, the starter never worked, which caused me to be cognizant of always parking the car on a slope to be push started every time I got in the car. For a 16-year-old, this was really no big deal, but from a practicality perspective, it was not always easy to find a proper place to park.


Countless hours were also spent with the car in the driveway with the hood open tinkering with various auto parts trying to make them work. (Remember, it was a classic and the internet with overnight delivery was not an option.) Had I thought through the actual impact of owning a classic and the financial budget it would take to own the car, when all I truly needed was basic transportation, my purchase would have been radically different. When I got into college the car was unsuitable for basic transportation and a change was needed. Fortunately, I was able to scrape enough money together to purchase a more reasonable mode of transportation that got me through college without issue. Sure, one could chalk that up to a teenager. But I look back and see how my impulse cost me dearly in time, energy and financial resources that I really didn’t have.

2016 was the year for patience. In January, the market declined 10% if for no other reason than oil prices collapsing from then $40 a barrel to $30 a barrel. The market decided to move in direct correlation to oil prices, which generally is an anomaly. Lower fuel costs tend to be a good thing for consumers and industries that use large amounts of energy. It is normally the oil industry that suffers as a whole and the rest of the market benefits from lower energy costs. However, the market decided to make “oil” the excuse and it did. Patience is what was called for during the first 30 days of 2016.


By summer, oil prices had rebounded and as such, so did the market. No, it did not reach new highs, but it fully recovered from January. But as you remember, a very pivotal election took place in Great Britain known as “Brexit”. The vote in June by British citizens was to determine whether or not to remain in the European Union. The experts predicted the vote would be “no”. But since predictions were rarely correct in 2016, the voters approved an exit. The markets once again decided to take a turn for the worse in the final trading days of the quarter, once again creating the need for patience.

While “Brexit” was short lived, the market only declined for 3 days, the focus quickly turned to the Presidential election.  Like all of you, I’m so happy this election is behind us. Not a minute went by without predictions of who was going to win and why. Leading up to the election, the market seemed to know and price in the results of the election with the market advancing nicely leading up to the election.

Truthfully, I have never watched the election results so closely. I left the office at 4:30 listening to CNBC on the way home only to hear an early prediction that just didn’t seem possible. It caused me to immediately turn on the television as soon as I got home. What fascinated me just as much as the election results was the reaction in the financial markets after hours trading (known as futures). By the time I went to bed, the futures market indicated the market would open down over 950 points. While market declines following the election is “normal”, the negativity of the elections results from the market certainly peaked well above the experts opinions.


Fortunately, I was able to get some sleep. By the time I woke to go for my early morning bike ride, the market at that time was down only 350 points. “I can handle that,” I said to myself. When I returned from my ride, the market was basically flat, showing no decline or gain in the financial markets at the opening bell at 6:30am. “I can definitely live with that.” Either way the market had opened following the election would not have changed my assessment of what do to next. Just like the oil correction, Brexit and now the election, it was a time for remaining calm and patient. Little did the experts know, the markets would finish stronger than ever predicted by just about everyone. Predictions that were made about the financial markets at the beginning of the year, during Brexit and the election failed miserably.

It is not just 2016 where patience mattered. 2013 was a great year for most investors. 2014 was less than mediocre, while 2015 gave back whatever mediocrity was gained in 2014. Everyone was still living off the gains of 2013, with a sideways moving market environment for the 2 years that followed. Prior to the election, I found myself trying to figure out what would be the next reason for the market to advance. Would it be rising interest rates? Would it be continued GDP growth or corporate earnings beating analyst expectations? Would it be a flight from safety (bonds) to risk (stocks)? What will be the next impetus? Candidly, I did not have an answer. Who would have thought that after 10 months of campaigning it would actually be the results of the election?

Clearly, it is much too early to claim victory in the financial markets due to the election. But what is certainly clear, asset allocation is alive and well. The turnaround in US small company stocks and value stocks in the final quarter was impressive and staggering. Both significantly outpaced US Large company stocks by years end. Again, a prediction very few saw coming to fruition.


As we enter the New Year, all progress to accomplish our goals of  getting healthier, more sleep, losing weight or more travel will require a plan and diligence to see it through. While these are all admirable goals, they do not happen overnight. It takes focus, diligence and patience to get the results we are looking for. Fortunately for all of us, patience paid off in 2016. I’m not a gambler and fortunately not a professional day trader, but I am betting patience will continue to pay off for us in the future.

Things to look forward to at Kemp Financial Management in 2017

  1. Technology – We have enhanced our technology capabilities in a variety of ways. One of our primary goals for 2017 is to take more advantage of what technology can do for all of us. For clients outside the Southern California area, we plan to take advantage of video conferences. Don’t be surprised if we attempt to do that with those that have that capability and desire.
  2. New office – Our office has a new look and a new feel to better reflect the way we provide advice. We are hopeful you will enjoy and appreciate the new look when you come in for your update meetings. For video conferences, you will also be able to see the new look and feel.
  3. Communication – You will be invited to participate in a few brief online questionnaires this year. With each questionnaire, you will be provided with a report, where you will find helpful information to understanding your personal communication style. The results will better enhance our ongoing communication with you. This is the simplistic overview as we will share more in the upcoming update meetings.
  4. New Book – Throughout the majority of 2016, I made a commitment to rewrite the book I co-authored with John Cooke in 1998. While the principles of the original book are still being instituted today, I have taken a deeper dive into how to achieve financial success and happiness, advancing the discipline of advice well beyond just the basics of investing. More information about the book will be made available upon its completion.

KFM Newsletter: "Don't Stop Believing" - Quarterly Review

“September’s Consistently Terrible Record” The Dow has fallen an average of -1.1% since the late 1890’s wrote Mark Hulbert of Market Watch in August 2016. September 2016 is behind us. Since the Dow Jones Industrial Average was created in the late 1890s, September has produced an average loss of 1.1%. The 11 other months of the calendar, in contrast, have produced an average gain of 0.8%. While we use the Standard and Poor 500 Index as our barometer, September 2016 produced a negative return of -0.014% with the quarter returning 3.28% (Source: Google Finance). So it was not quite as bad as the average September.

Despite the September volatility, we held our 8th annual What Matters Most: Ladies Night Out at California State University Fullerton’s Concert Under the Stars: American Band Stand. With a record attendance, we enjoyed the sounds of the University’s music department singing a collection of tunes that touched all 50 States. One of the more memorable songs of the evening was Journey's "Don't Stop Believing" (Detroit, MI) performed a cappella. It was so good that it seemed fitting to use for our newsletter title. With a great dinner, great friends, great performance and incredible patriotic firework display to complete the evening, we could not ask for a more enjoyable time together.


Many for our clients used Facebook to share the experience with their friends during and after the event. I believe it was the first time our events hit social media thanks to our clients. It was great to read all the comments and posts from those in attendance. Remember to mark your calendar for next years What Matters Most: Ladies Night Out on September 23, 2017. The University will be celebrating their 60 year anniversary. Like all of the past performances, we expect 2017 to be another spectacular evening.

The Markets (as of market close September 30, 2016)

The second quarter provided yet another bumpy ride for investors. Following the upheaval caused by the Brexit vote in June, July kicked off the third quarter by ending the month in favorable fashion, as each of the indexes listed here posted month-to-month gains, led by the Russell 2000 (5.90%) and the NASDAQ (6.60%). Stocks held their own for July, despite falling energy shares, as crude oil prices (WTI) sank from around $49 per barrel to under $42 by the close of July. As money moved into equities, bond yields remained on the low side as the yield on 10-year Treasuries remained below 1.60%, closing July at just about where it started at 1.45%.

The dog days of summer saw light trading in August, but that didn't stop the markets from moving sharply. By the middle of the month, the Dow, S&P 500, and NASDAQ had surged to all-time highs — the first time since 1999 that all three indexes reached a new high at the same time. Yet by the end of August, each of the indexes listed here saw their values fall back to about where they were at the beginning of the month. The large-cap Dow and S&P 500 fell ever so slightly from July's closing values, while the Russell 2000 and Global Dow posted modest gains for the month. Crude oil fell below $40 per barrel during the month, but rebounded to close the month at about $45 per barrel. Bond prices fell as the yield on 10-year Treasuries reached 1.60%.

For the month, September ended about where it began for equities. Of the indexes listed here, there was relatively little movement during the month, except for the Russell 2000 and the NASDAQ, each of which posted gains for the month close to or over 1.0%. Overall, the third quarter proved to be a good month for stocks as the indexes listed here posted notable gains, led by NASDAQ, the Russell 2000, and the Global Dow. Long-term bond yields measured by 10-year Treasuries hovered around 1.60% for September, closing the month and quarter at 1.59% — just about where they ended the second quarter. Gold lost value, closing the second quarter at $1,318.80, down from its June closing value of 1,324.90. Crude oil (WTI) ended the second quarter at about $48.59 per barrel, just about the same price it ended the third quarter ($48.05).

Monthly Economic News

  • Employment: The employment sector slowed a bit in August, but remained steady with 151,000 new jobs added for the month, compared to 275,000 new jobs added in July. The unemployment rate remained at 4.9% in August — the same as July. There were 7.8 million unemployed persons. Both the unemployment rate and the number of unemployed persons have shown little movement. Interestingly, the unemployment rate for adult men and adult women was the same — 4.5%. The labor force participation rate remained at 62.8% as did the employment/population ratio, which was 59.7%. According to the latest figures from the Bureau of Labor Statistics, the average workweek decreased by 0.1 hour to 34.3 hours, while average hourly earnings rose to $25.73 compared to $25.59 at the end of July.
  • FOMC/interest rates: The Fed did not raise interest rates in September, keeping the federal funds target rate at the 0.25%-0.50% range. Following its September meeting, The FOMC's Chair Janet Yellen noted that while a case for a rate increase has strengthened based on overall economic strengthening, consumer price inflation continues to run at a rate that is under the Committee's target of 2.0% and labor market slack is being taken up at a somewhat slower pace than in previous years. Nevertheless, it appears more likely that the Fed will increase rates by the end of the year.
  • Oil: The price of crude oil (WTI) fluctuated some during September, hovering between $43 and $45 per barrel, finally settling at $48.05 per barrel by the end of the month. The national average retail regular gasoline price was $2.224 on September 26, down from the August 29 selling price of $2.237.
  • GDP/budget: The U.S. economy is expanding, but at a slow pace. According to the Bureau of Economic Analysis, the final estimate of the second quarter 2016 gross domestic product grew at an annualized rate of 1.4%, compared to the first quarter, which grew at an annual rate of 0.8%. The primary positives driving the upward movement of the GDP were nonresidential (e.g., business) fixed investment, private inventory investment, and exports. An indicator of inflationary trends, the price index for gross domestic purchases increased 2.1% in the second quarter, compared to an increase of 0.2% in the first quarter. As to the government's budget, the federal deficit for August was $107 billion, as total receipts came in at about $231 billion and total outlays were $338 billion. The deficit at the end of July was about $113 billion. Through the first 10 months of the fiscal year, the deficit sits at $620.8 billion, compared to $530 billion over the same period last year. The government's fiscal year ends in October.
  • Inflation/consumer spending: Inflation slowed in August as consumer income and spending increased only marginally. Personal income (pretax earnings) and disposable personal income (income less taxes) each rose 0.2%, while personal spending, as measured by personal consumption expenditures, gained less than 0.1%. Core personal consumption expenditures (personal spending excluding volatile food and energy costs) rose 0.2% in August, following a 0.1% monthly increase in July. The price index increased 0.2% for the month, and is up 1.0% year-over-year. The Producer Price Index, which measures the prices companies receive for goods and services, was unchanged in August from July, when prices fell 0.4%. Excluding food, trade services, and energy, prices crept up 0.3% for the month. For the 12 months ended in August, the index for final demand less foods, energy, and trade services moved up 1.2%, the largest increase since climbing 1.3% for the 12 months ended December 2014. The index for final demand services edged up 0.1% in August following a 0.3% decline in July. The Consumer Price Index, which measures what consumers pay for both goods and services, increased 0.2% in August. Over the last 12 months, the CPI has risen 1.1%. The index less food and energy increased 0.3%.
  • Housing: The housing market definitely slowed in August. Higher home prices and a lack of available homes for sale are the main reasons given for the drop in the housing sector. Existing home sales fell 0.9% to a seasonally adjusted annual rate of 5.33 billion, down from July's downwardly revised annual rate of 5.38 billion, according to the National Association of Realtors®. However, existing home sales are slightly ahead of last year's rate of 5.29 billion. The median sales price for existing homes was $240,200 — up 5.1% from August 2015. Total housing inventory at the end of August fell 3.3% to 2.04 million existing homes available for sale, and is now 10.1% lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. The Census Bureau's latest report reveals a fall in new home sales as well. Sales of new single-family homes fell 7.6% in August to an annual rate of 609,000 — down from July's rate of 659,000. The median sales price of new houses sold in August was $284,000, while the average sales price was $353,600. Available inventory of new homes for sale did expand slightly from July. The seasonally adjusted estimate of new houses for sale at the end of August was 235,000. This represents a supply of 4.6 months at the current sales rate, which is up from 231,000 homes available (supply of 4.2 months) in July.
  • Manufacturing: One of the reasons the Fed has held off on raising interest rates is the continued weakness in the manufacturing and industrial production sectors. The Federal Reserve's monthly index of industrial production (which includes factories, mines, and utilities) fell 0.4% in August after rising 0.6% in July. Manufacturing output also declined 0.4% for the month. At 104.4% of its 2012 average, total industrial production in August was 1.1% lower than its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in August to 75.5%, a rate that is 4.5 percentage points below its long-run (1972-2015) average. The latest report from the Census Bureau shows new orders for all durable goods (expected to last at least three years) fell $0.1 billion in August from the prior month. Excluding the volatile transportation segment, new orders fell a disappointing 0.4%. Orders for capital goods dropped 4.4%, while shipments fell 0.4%.
  • Imports and exports:The advance report on international trade in goods revealed that the trade gap narrowed by 0.6% in August. The overall trade deficit was $58.4 billion in August, down $0.4 billion from July. Exports rose 0.7% to $124.6 billion, $0.9 billion more than July exports. Imports jumped 0.3% to $183.0 billion, $0.5 billion more than July imports. The prices for U.S. imports (goods purchased here but produced abroad) fell for the first time since February, primarily driven by lower fuel prices. August imports sank 0.2% following a 0.1% gain in July. The prices for exports declined 0.8% following four consecutive months of increases. Year-on-year, import prices are down 2.2% and export prices have fallen 2.4%.
  • International markets: According to the World Trade Organization, world trade will grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%. With expected global GDP growth of 2.2% in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009. The WTO warned that long-term economic growth could be weakened if growing antiglobalization continues to slow trade. The Bank of Japan maintained its stimulus policy, hoping to rally equities and spur inflation. Great Britain is still trying to stem its economic slowdown following voters' decision to leave the European Union. More stimulus measures from the Bank of England are expected, including further interest rate decreases.
  • Consumer sentiment: Despite several weakening economic indicators, consumer confidence gained some momentum in August. The Conference Board Consumer Confidence Index® for August rose 4.5 points to 101.1. On the other hand, the Surveys of Consumers of the University of Michigan Index of Consumer Sentiment dipped from 90.4 in July to 89.8 in August. The personal savings rate continues to increase as personal income from wages have increased as well.

Eye on the Months Ahead

Today’s headline? “Investors See Big Risks in 4th Quarter” (Wall Street Journal). What a great way to start the outlook for the new quarter. Surprisingly, most investors see October as the month to dread. We have October 1929, 1987, 2002 and 2008 to thank for those beliefs. However, since 1950, the S&P 500 has actually increased by 1.08% For November and December we have seen a net increase of 0.82% and 0.83% respectively since 1950. As for the outlook from the Wall Street Journal, it really is no different from any other day. The media likes to sell negativity for active readers like me. But one must filter the source and review the long-term data, which appears quite optimistic for the 4th quarter. Since 1950, the fourth quarter has averaged a gain of 3.92%.(Source: Moneychimp)


While we do not have the proverbial crystal ball, we do believe you are properly allocated to meet your long-term goals. When we compare the options, stocks versus bonds versus cash, we continue to hold firm to one of our ten truths: Stocks outperform bonds and cash over long periods of time. We continue to monitor your progress, while keeping your short and long-term needs in mind. We look forward to discussing your progress in the upcoming months ahead. We continue to encourage you to look beyond the noise and confusion created by the media as well as our upcoming election. Should you have any questions relating to your personal situation, please contact our offices at your earliest convenience. Wishing you and your family the very best Thanksgiving celebration as we have so much to appreciate.


Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/ Market Data (oil spot price, WTI Cushing, OK); (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

KFM Newsletter: A Look at Brexit


Earlier in the year, my wife and I planned a trip to London with a goal to see Stevie Wonder at Hyde Park on July 11thfor our 29th wedding anniversary. We had asked our kids if they would like to go, but they all said “no” for a variety of reasons. When it came time to commit to the trip, the kids changed their minds and decided it wasn’t “fair” that we were not having a traditional family vacation. So Diane and I booked a family vacation to the Big Island of Hawaii with the children instead.

In so doing, we lost out on a 25% discount by not going to London. For starters, air fares have dropped substantially due to more seats being available. The strength of the U.S. dollar along with the drop in the British Pound would have decreased our lodging and meals by 25%.  Even the concert tickets dropped by over $200 per ticket. Had we known “Brexit” was going to pass, not only would we have gone, but we would also have taken our children along regardless of their lack of “enthusiasm” for going to London. Instead, we hit the Big Island of Hawaii during peak season, paying premiums on everything that we would like to do while we enjoy our time together.

So, what just happened?

The announcement early Friday morning that British voters chose to exit the 28-nation European Union by a 52% to 48% margin defied appeals from every major European economic and political institution. The surprise vote to “Leave” was part of a move to sovereignty and a rising rebellion against the political establishment due to slow growth, income inequality and disagreements on immigration reform (similar to the U.S.). U.K. Prime Minister David Cameron stated that he will resign by October, since he staked his reputation on a “Remain” vote. The response to the vote was market chaos as risk assets immediately plunged -- global equities lost roughly -4.8% or $2 trillion in market value (according to S&P), the British pound fell to its lowest level since 1985 and the euro and oil all dropped significantly last Friday June 25th. While this occurred in the global equity markets, traditional safe havens, notably U.S. government bonds, gold, the U.S. dollar, Swiss franc and Japanese yen, rallied in a “flight to safety”. The outcome was an unforecastable shock (the U.K. betting markets had put a 79% probability on a Remain vote even though recent polls suggested a close vote) and surprised the markets.

We do not consider the so-called Brexit to be a cataclysmic event like the “Lehman moment” in 2008. In contrast, the Lehman Brothers’ collapse in September 2008 led to a serious global financial crisis because of the precarious interrelated position of the banking system. Today, U.S. and European commercial banks have substantially more capital and considerably less leverage and central banks are currently poised to help stabilize markets unlike 2008.

With this most recent event, the Fed is unlikely to raise rates later this year unless global financial conditions stabilize and employment improves. The Bank of England moved swiftly and announced it was ready to provide $460bn in liquidity and it is expected to soon cut rates and the Bank of Japan will probably further ease policy in July.

The U.K. exit process will be long, complex and difficult over at least a two-year period. Prolonged uncertainty in the EU (potentially including more “exits”), political turmoil in the U.K. and declines in trade, foreign investment and immigration will slow growth, or trigger a recession in the U.K. and retard growth in the rest of European economies over the next year or two. Since the U.K. is less than 4% of the world economy most economists expect the U.K. decision to slow GDP growth in the rest of the world by a relatively modest 0.2% over the next 12 months.


It will be some time before all the outcomes of this historic change become evident. There is even the possibility of a second referendum on both the U.K. leaving the EU and Scotland leaving the U.K. (a majority of voters in Scotland and Northern Ireland voted to remain in the EU), and millions of U.K. voters have signed an online petition demanding a re-vote of the referendum.

Despite Friday’s turmoil in global financial markets and the likelihood of aftershocks in the market, we believe that the U.S. will experience continued moderate economic growth, coupled with low inflation and low interest rates. As always, all investors should avoid knee-jerk reactions and decisions, be prepared for a period of relatively indiscriminate selling and market volatility over the next few weeks and dispassionately look past the near term turmoil. We believe it is important to maintain target asset allocations while rebalancing to take advantage of the price movements when appropriate. Changing long-term asset allocations and investment strategies on the basis of emotional reactions to frantic short term panics will only do more harm than good.

For years, we have always joked about closing our offices from Memorial Day to Labor Day as our clients participate in graduation celebrations, family reunions and travel. We know our update meetings generally slow down during the summer months for these reasons. But the past three summers have included concerns over Portugal, Italy, Greece and Spain (2014), China (2015) and now Great Britain with “Brexit”. Just like we saw fairly quick recoveries in 2014 and 2015 from the “panic” reaction created by each of the summer events, we fully anticipate the same with “Brexit”.  For any of you that are thinking about traveling abroad, now might be a great opportunity to take advantage of the strength of the dollar. Don’t miss out on the unique once in a life time drop in prices like Diane and I did. If only we had the proverbial crystal ball to predict the significant discounts, it would have been a done deal.


As for statement values, fortunately the markets bounced back a bit in the last few days of the June. It appears this may only have been a very short-term (two days) “shock” to the capital markets. Had the quarter ended mid-June, you would have seen fairly decent valuations coming from the asset classes included in your portfolio. Regardless, we do not see this as a cataclysmic event or detrimental to the long-term outlook of your financial well-being. We hope all of you had a safe and happy Independence Day! Please continue to enjoy the remainder of your summer appreciating and enjoying what matters most!